NEW LONDON — State financial regulators have suspended a New London financial advisory firm from conducting business after determining that the firm has a negative net worth and its owner breached fiduciary duties on behalf of his clients.

Merryfield Investment Management and its principal, Peter Field, were ordered to cease business by the New Hampshire Secretary of State’s Bureau of Securities Regulation, according to a news release from the bureau this week.

Field has 30 days to request a hearing on the order, at which time an administrative law judge can uphold, modify or vacate the order.

If a hearing is not requested or if Field fails to appear, the suspension then defaults to a final order.

This is the second action the bureau has taken against a New London financial adviser in recent months. State regulators ordered Thomas Chadwick in August to repay more than $11 million to clients after he put their money into a high-risk investment fund that collapsed.

The action against Field alleges he ran afoul of conflict-of-interest regulations by soliciting his clients to buy stock in his firm and to loan him money.

“Not only are the borrowing and share purchase transactions a violation of New Hampshire securities law, but they present a substantial financial risk to the (Merryfield) clients and have, in essence, negated Field’s fiduciary obligation to be unbiased toward his clients and act in their best interest,” the order said.

Field contended that the transactions with clients were undertaken in a personal capacity and did not represent firm business, but regulators said they rejected that argument, explaining there is no effectual distinction between the two.

The “personal conduct of Field in borrowing money from clients and selling his Merryfield stock holdings was facilitated by and through Merryfield and could not have taken place if not for the Merryfield/client relationship,” the order states.

As a result of the transactions, Field now owes more than $1 million in debt while his firm has only about $243,000 in assets, according to the order dated Oct. 4.

Field, whom the firm’s website identifies as a graduate of Dartmouth College and Dartmouth’s Tuck School of Business, did not respond to messages for comment on Friday.

New London, close to Lake Sunapee with its concentration of wealthy vacation home owners, has numerous financial advisory firms.

As of November 2022, Merryfield had about $42 million under management on behalf of approximately 80 “household accounts,” regulators said. Field charged clients a management fee ranging between 0.15% and 1.5% annually, depending on the amount of assets under management.

Typically, Field would cut the management fee they charged clients — and in some cases eliminate it altogther — if clients purchased shares in Merryfield.

Field sold shares to clients under “repurchase agreements,” meaning that he had committed himself to buy back those shares.

But when clients said they wanted exercise the repurchase option and sell back their shares, Field informed them that he didn’t have the funds available and instead proposed that he pay for the purchase over time and at an interest rate that he set, the bureau’s order said.

The order lists 23 clients with whom Field entered into either share repurchase or loan agreements.

The share repurchase agreements range from a low of about $12,000 for 31 shares to a high of $195,000 for 476 shares. The loan agreements range from $9,000 borrowed from one client to a high of $230,000 in two separate loans from the same client.

Now Field is indebted to his advisory clients for more than $850,000 — excluding interest — and if money Field borrowed additionally from his own firm and Mascoma Bank is added into the mix as well, his total debt exceeds $1 million.

Field told investigators that he turned to borrowing from his clients because “he needed money to pay for operating expenses and living expenses,” the order said.

Contact John Lippman at jlippman@vnews.com.