Securities Lawyers Blog
The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Richard Cagle (Cagle), formerly employed by Hilltop Securities Independent Network Inc. (Hilltop Securities) has been subject to at least two customer complaints and one regulatory complaint resulting in a bar from the financial industry. According to records kept by The Financial Industry Regulatory Authority (FINRA), Cagle’s customer complaints allege that Cagle recommended unsuitable securities recommendations among other allegations of misconduct in the handling of customer accounts.
In July 2019 Cagle consented to the sanction and to the entry of findings that he refused to appear and provide an on-the-record testimony requested by FINRA. FINRA stated that it commenced an investigation into whether Cagle violated FINRA rules by making unsuitable investment recommendations and mismarking customer order tickets while associated with his former member firm. Cagle’s failure to respond to the investigation drew an automatic bar from the industry.
Brokers are required under the securities laws to treat their clients fairly. This obligation includes the duties to disclose material risks of the investments they recommend and to present products, particularly complex or confusing products, in a fair and balanced manner that allows the client to evaluate the recommendation. Another important obligation advisors have is to make only suitable recommendations for investments to the client. There are many investments that are not appropriate for the majority of investors or for certain investors given their risk tolerance, age, and other factors. Advisors should not present these investment options to clients. There are two screens that advisors must employ to determine whether an investment is suitable for a client. First, there must be a reasonable basis for the recommendation – meaning that the product has been investigated and due diligence conducted into the investment’s features, benefits, risks, and other relevant factors. The advisor must conclude that the investment is suitable for at least some investors and some securities may be suitable for no one. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Cagle entered the securities industry in 1991. Since March 1997 Cagle has been registered with Hilltop Securities out of the firm’s Corpus Christi, Texas office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.