Broker Investigation: Beech Hill Securities Advisor Frank Hamrak

shutterstock_179465345-300x200Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Frank Hamrak (Hamrak) currently associated with Beech Hill Securities, Inc. (Beech Hill) alleging unsuitable investments, breach of fiduciary duty, and negligence among other claims.  According to brokercheck records Hamrak has been subject to five customer complaints, one bankruptcy in 2011, and one judgement or lien.

In November 2016 a customer brought a complaint against Hamrak alleging that investments in the customer’s account from 2014 through 2016 were unsuitable.  The complaint alleges $185,000 in damages.  The complaint is currently pending.

In May 2016 another customer filed a complaint alleging unsuitable investments, negligence, and breach of fiduciary duty from January 2011 until January 2016 causing $750,000 in damages.  The complaint is currently pending.

Brokers in the financial industry have the fundamental responsibility to treat investors fairly.  This obligation includes making only suitable investments for their client.  The suitable analysis has certain requirements that must be met before the recommendation is made.  First, there must be reasonable basis for the recommendation for the investment based upon the broker’s and the firm’s investigation and due diligence.  Common due diligence looks into the investment’s properties including its benefits, risks, tax consequences, the issuer, the likelihood of success or failure of the investment, and other relevant factors.  Second, if there is a reasonable basis to recommend the product to investors the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives.  These factors include the client’s age, investment experience, retirement status, long or short term goals, tax status, or any other relevant factor.

Hamrak entered the securities industry in 1985.  From April 2007 through June 2010, Hamrak was registered with Morgan Stanley Smith Barney.  Since June 2010 Hamrak has been associated with Beech Hill out of the firm’s New York, New York office location.

The number of events listed on Hamrak brokercheck is high relative to his peers.  According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records.  Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints.  In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters.  However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck.  More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Gana LLP’s securities fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of fraud and negligence.  The majority of these claims may be brought in securities arbitration before FINRA.  Our consultations are free of charge and the firm is only compensated if you recover.