FINRA’s Department of Enforcement investigated Miller’s alleged misconduct and found he recommended $5.4 million unit investment trusts (UITs) to 129 customers. A UIT is a type of investment company that issues securities, typically referred to as “units,” which represent undivided interests in a relatively fixed portfolio of securities. According to FINRA, the UITs that are at issue were multiple similar series municipal-income UITs issued by the same product sponsor.
FINRA alleged Miller failed to conduct reasonable due diligence before recommending the UITs to customers. For example, Miller allegedly did not understand the primary features and risks associated with the UITs, such as their composition, basis for distribution payments, volatility, liquidity, use of leverage, and valuation at termination. As a result, FINRA alleges Miller misrepresented to his customers that: 1) the UITs could lose value only if bond rates rose or municipalities defaulted; 2) the UITs’ principal would be returned at trust termination so long as bond rates did not rise and municipalities did not default; and 3) any losses from net asset value fluctuation would be less than the interest payments the customers would receive over the life of the trust.
Based upon the foregoing alleged misconduct, FINRA contends Miller violated FINRA Rules 2010 and 2111. Under FINRA Rule 2111, registered representatives are required to recommend suitable investments and investment strategies to their clients (known as the suitability rule). Typically, a claim for unsuitable investments is brought as a form of a negligence claim with the theory: the representative had a duty to recommend suitable investments; the representative breached the duty with unsuitable investments; and the representative’s unsuitable investments caused the investor damages.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment losses investing with Miller through Huntington Investment, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact below or contact one of our attorneys at (800) 627-2179 to schedule a free consultation.