The Financial Industry Regulatory Authority (FINRA) recently filed a complaint against former Cetera financial advisor Christopher Hickman (Hickman). The underlying basis of the complaint alleged Hickman recommended unsuitable short-term unit investment trusts (UITs) in some of his clients’ accounts. Hickman settled the complaint with FINRA and accepted a five (5) month suspension, $5,000 fine and required to pay restitution to his victims.
Hickman (FINRA CRD No. 3267599) has been a member of FINRA since 2001. From 2006 to 2009, Hickman worked for Banc of America Investment Services, Inc. From 2009 to July 2015, Hickman worked for Cetera Advisors, LLC (“Cetera”) Hickman’s FINRA BrokerCheck report includes eight negative disclosures.
FINRA’s Department of Enforcement brought a complaint against Hickman for the following alleged misconduct. FINRA alleged between May 2011 and April 2014, Hickman recommended unsuitable UIT investments to six customer accounts. A UIT is a type of investment that issues securities in the form of units, which represents undivided interests in a fixed portfolio of securities. Generally, UIT investments are considered long-term investments and short-term recommendations may be considered unsuitable.
Specifically, Hickman recommended UITs with 24-month maturity dates with sales charges of close to 4%. According to FINRA, despite the two-year maturity dates, Hickman recommended his clients sell the UITs after holding them on average for 136 days. According to FINRA, the transactions resulted in approximately $116,000 in losses to the affected clients.
Based upon the foregoing misconduct, FINRA alleges Hickman violated FINRA Rules 2111 and 2010. FINRA Rule 2111, for example, requires financial advisors to recommend suitable investments and investment strategies to their clients (known as the suitability rule) based upon the client’s unique financial situation, including investment objectives and risk tolerance. A financial advisor also must have a reasonable basis to believe that a recommended transaction or investment strategy is suitable for the customer.
Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.