The securities attorneys at Gana Weinstein LLP are currently investigating Founders Financial Securities LLC (Founders Financial) broker Timothy Lofton (Lofton). According to BrokerCheck Records, Lofton has been subject to termination from employment due to alleged outside business activities. In addition, Lofton has been subject to three customer disputes concerning unsuitable investments.
Most recently, in April 2018, Horter Investment Management discharged Lofton for failing to follow the company’s policy regarding outside business activities.
In October 2009, a customer alleged that Horter recommended securities that were unsuitable for the customer in terms of the customer’s age and misrepresented the material facts of the investment. The customer requested $5,000 in damages.
In May 2016, Lofton filed for bankruptcy due to corporate debt. Bankruptcy is a potential sign that financial advisors are struggling with their finances. The Financial Industry Regulative Authority (FINRA) makes this information public so that investors can have a better sense of their brokers.
At this time it is unclear the extent and scope of Lofton’s outside business activities or if they involve private securities transactions. Often times undisclosed outside business activities can lead to private securities transactions. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. Selling away occurs when a broker engages customers to invest in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm, and it can occur when firms fail to implement a reasonable supervisory system.
Brokers are also obligated to make suitable investments for clients. For an investment to be suitable, it must meet certain requirements. First, there must be reasonable basis for the recommendation based upon the broker’s research and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factors.
Lofton entered the securities industry in November 1993 and has been registered with Founders Financial since May 2018. From December 2014 to February 2017, Lofton was registered with Wells Fargo Advisors Financial Network, LLC. From June 2009 to December 2014, Lofton was registered with Morgan Stanley. From May 2009 to June 2009, Lofton was registered with Morgan Stanley & Co. Incorporated. From March 2003 to May 2009, Lofton was registered with UBS Financial Services inc. From February 1995 to March 2003, Lofton was registered with Edward Jones. From November 1993 to December 1995, Lofton was registered with Banc One Securities Corporation.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and firms failure to supervise. Our consultations are free of charge and the firm is only compensated if you recover.