oreide Law Group obtained the following information from FINRA’s August 2017 Disciplinary Report, available to the public on FINRA’s website.
Hilltop Securities Independent Network Inc. (formerly known as: SWS Financial Services, Inc.) (CRD #17587, Dallas, Texas) and Douglas Lee Hodges (CRD 4253217, Celina, Texas)
Hilltop Securities was censured, fined $40,000 and required to pay $5,329.75, plus interest, in restitution to clients. Hodges was fined $5,000 and suspended by FINRA for 15 business days. Allegedly, the firm failed to reasonably supervise a registered representative’s unsuitable investment recommendations to clients, while acting through Hodges, its regional Office of Supervisory Jurisdiction manager.
FINRA’s findings alleged that Hilltop Securities’ representative engaged in unsuitable short-term trading and switching in open-end mutual funds and/or unit investment trusts (UITs) in four different client accounts, and engaged in unsuitable trading in closed-end funds in two of the four clients’ accounts. Three of the four investors lost a total of $5,329.75 as a result of the representative’s unsuitable trading activity. In seven instances, Hilltop Securities, acting through Douglas Hodges, failed to obtain required switch letters from the representative for certain open-end mutual fund and/or UITs transactions that the representative had executed in client accounts.
FINRA alleged that even when the representative submitted required switch letters, Hilltop Securities and Hodges failed to follow-up on “red flags” in the submitted letters. Allegedly, Hodges did not document his reviews by completing an active account review form or making notations in the compliance software system as required by Hilltop Securities’ written supervisory procedures (WSPs).
FINRA’s findings also alleged that Hilltop Securities failed to establish, maintain, and enforce a reasonable supervisory system to detect and prevent unsuitable short-term trading and/or switching of open-end mutual funds and UITs, and unsuitable trading in closed-end funds in client accounts. The parameters of the firm’s automated compliance software system were too limited to detect unsuitable trading, and the volume of transactions being manually reviewed by individual supervisors was too high for the supervisor to be able to reasonably detect patterns and trends of possible unsuitable trading activity.
This suspension was in effect from July 17, 2017, through August 4, 2017.
(FINRA Case #2013034954002)
If you were a client of Douglas Lee Hodges and/or any other broker at Hilltop Securities Independent Network Inc of Dallas, Texas, and experienced losses due to their actions or recommendations, call Soreide Law Group for a no-cost consultation with a securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at: 888-760-6552.
Soreide Law Group represents clients nationwide before FINRA and we operate on a contingency fee basis. Call today and let our experience work for you.