John Hudnall of Pacifica, California was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleged he participated in undisclosed and/or unapproved outside business activities while associated with a FINRA member firm. Mr. Hudnall entered the securities industry in 2000 and was associated with FINRA member firms BancWest Investment Services, Inc. (BancWest) and US Bancorp Investments, Inc. (US Bancorp) during the relevant period.
FINRA alleged that Mr. Hudnall, while associated with US Bancorp and Bancwest, participated in an undisclosed and unapproved private securities transaction, made unapproved and undisclosed financial sales promotions to firm customers, recommended and sold an unsuitable variable annuity product and provided false information in response to FINRA information requests. FINRA’s investigators also alleged that in connection with an undisclosed securities transaction in May 2012, Mr. Hudnall artificially split a customer’s $400,000 REIT investment into two parts and submitted only the smaller part ($40,000) to his firm for supervisory review and approval generating himself $25,000 in ill-gotten commissions.
Additionally, FINRA found that Mr. Hudnall implemented a system in which he offered and paid monetary incentives to two customers from his own personal funds to incentivize clients to hold their fixed annuity contracts for longer periods of time enabled Mr. Hudnall to retain commissions he would have lost had the customer opted out. Furthermore, in July 2014, FINRA alleges that Mr. Hudnall, while associated with US Bancorp, recommended and sold a variable annuity to a client that provided no material benefit, had additional costs and offered less flexibility with fewer investment options and additional liquidity risk.
The Department of Enforcement of FINRA has requested findings of fact and conclusions of law that Mr. Hudnall committed the violations charged and alleged within the complaint and has ordered that one or more of the sanctions provided under FINRA Rule 8310(a) be imposed.
FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as 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 held liable to account holders for investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like BancWest and US Bancorp, which have a duty to supervise employees in order to protect their customers’ interests.
Have you suffered losses in your BancWest and/or US Bancorp account due to a broker or firm misleading participating in undisclosed and/or unapproved outside business activities? 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 BancWest and US Bancorp stockbrokers who may have engaged in misconduct 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.