David Lockey, a stockbroker formerly employed with SWS Financial Services, Inc. n/k/a Hilltop Securities Independent Network, Inc., submitted an Offer of Settlement to the Financial Industry Regulatory Authority (FINRA) in which he was assessed a deferred fine of $10,000, suspended for six months, and ordered to pay disgorgement of portion of his commissions of $46,447.38 and restitution to customers. Without admitting or denying FINRA’s allegations, David Randall Lockey, of Carrollton Texas, consented to the entry of findings that he recommended and engaged in a pattern of unsuitable trading of open-end mutual funds (OMFs), unit investment trusts (UITs), and/or closed-end funds (CEFs) in the accounts of four customers.
According to FINRA, David Lockey engaged in unsuitable short-term trading and switching in OMFs and/or UITs in the accounts of four customers. In two of those four customers’ accounts, Mr. Lockey is alleged to have made unsuitable trades and switches in CEFs. FINRA stated that David Lockey executed 37 trades in OMFs and/or UITs in the customers’ accounts in which they were held for less than one year. Those products are generally intended to be held long-term in order to off-set their fees. He also allegedly executed 23 unsuitable transactions in CEFs in two of the four customers’ accounts.
FINRA also found that Mr. Lockey falsified the dates of purchase on switch forms to make it appear that the securities had been held longer than a year. David Lockey was suspended by FINRA for six months, assessed a deferred fine, ordered to pay deferred disgorgement of commissions and ordered to pay deferred restitution to customers. The suspension is in effect from October 17, 2016 through April 16, 2017.
In every relationship between an investor and a stockbroker, the stockbroker must assess what the investor’s goals are as well as his or her risk tolerance. This assessment is based on a number of key factors, including the investor’s stated objectives, risk tolerance, financial condition and tax status. It is the broker’s responsibility to only pursue investments suitable for that investor based on these factors. A stockbroker is obligated to only recommend suitable investments and investment strategies. If a stockbroker recommends unsuitable investments and/or unsuitable trading strategies, it can leave you vulnerable to unnecessary risk and losses.
Stockbrokers have been known to engage in many types of practices that may be in violation of industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a reasonable supervisory system. The implementation of the rules require supervisors to monitor employees to ensure they comply with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered losses stemming from unsuitable trade recommendations or switches by their broker can bring forth claims to recover damages against broker-dealers, like SWS Financial Services, which should consistently oversee its brokers’ activities in order to prevent the above-described prohibited conduct.
Have you suffered losses in your SWS Financial Services account due to your stockbroker’s unsuitable trading recommendation or unsuitable investment switches? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against SWS Financial Services stockbrokers who may have engaged in unsuitable trading strategies and caused investors’ losses.
The most important of investors’ rights is the right to be informed! This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 35 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.