Broker Jeffrey A. Hill, who was formerly registered with brokerage firms Wells Fargo Advisors and Dougherty & Company in Bemidji, Minnesota, has been suspended from the securities industry for 15 months following allegations that he exercised discretionary trading authority in customer accounts without the customers’ authorization in order to implement unsuitable investment strategies. Dougherty was fined and censured for allegedly failing to adequately supervise Hill.
According to the suspension order issued by the Financial Industry Regulatory Authority, Hill initiated hundreds of unauthorized trades for two elderly clients between 2010 and 2014. It is alleged that dozens of those trades were qualitatively or quantitatively unsuitable or lacked a reasonable basis. Specific reference is made to 25 “in and out” trades that Hill either recommended or initiated. Six of those recommendations and transactions involved municipal bonds; the remainder involved corporate bonds. The trading was not justified by the bonds’ prices, interest that accrued, changes in the issuers’ condition, or any other legitimate factors. It appears that the sole purpose of the trading was to generate commissions.
Sadly, this is not the first time that Mr. Hill has been accused of unauthorized trading and unsuitable bond trading; Hill has been the subject of multiple customer complaints involved allegations of this nature stemming back to the 2000-2001 time period.
According to the order censuring and fining Dougherty, the firm relied on the discretion and judgement of Hill’s supervisor (which was not appropriately exercised) instead of providing the supervisor with adequate oversight and specific direction.
The alleged transgressions of Hill and Dougherty serve as a good reminder to investors that they should carefully review their account statements to make sure that their brokers are not engaging in unauthorized trading, which is often a means to another end for the broker, such as churning or the misappropriation of assets. Churning occurs when a stock broker engages in excessive trading of securities in a client’s account for the primary purpose of generating commissions. It can go undetected for months and even years if the brokerage firm charged with supervising the broker fails to carry out its supervisory obligations or simply turns a blind eye to the misconduct. .
If you have suffered losses as a result of the negligence or misconduct of Jeffrey A. Hill or Dougherty & Company, we may be able to assist you in recovering some or all of your losses. Call investor rights attorney Dan Broxup at Mika Meyers, PLC for a free, no-obligation consultation.