Erez Law is currently investigating former Wells Fargo financial advisor Jeffrey Alan Hill (CRD# 2204945) regarding initiating trades of municipal and corporate bonds for customers without their consent and recommending transactions that were not suitable for his customers. Hill was registered with Wells Fargo in Bemidji, Minnesota from 2004 to 2016 before he was terminated after the FINRA allegations and suspension. Hill was previously registered with Dougherty & Company LLC from 2003 to 2014, and the FINRA allegations are all alleged to have happened while Hill was employed at this brokerage firm. Hill is currently suspended from acting as a broker by FINRA and not registered with a brokerage firm.
According to the Acceptance, Waiver & Consent (AWC), it is alleged that Hill used discretion without permission to initiate hundreds of trades for two elderly customers without their consent approximately half of the time, and recommend or engage in dozens of transactions that were qualitatively or quantitatively unsuitable or lacked a reasonable basis, which included short-term trading of corporate and municipal bonds. By doing so, Hill violated NASD Rules 2310 and 2510(b), FINRA Rules 2010 and 2111, and MSRB Rules G-17 and G-19. NASD Rule 2510(b) refers to discretionary power in a customer’s account. NASD Rule 2510(b) is regarding discretion and authorization to make transactions in customer accounts, and violating that rule constitutes a violation of FINRA Rule 2010. NASD Rule 2310(a) requires brokers to “have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer.” MSRB Rule G-19 requires brokers to “have a reasonable basis to believe that a recommended transaction or investment strategy involving a municipal security or municipal securities is suitable for the customer.” And, violating MSRB Rule G-19 constitutes a violation of MSRB Rule G-17 that prohibits unfair practice.
The AWC also states that Hill recommended his customers sell bonds shortly after buying them, or he initiated those transactions, without any justification for the short-term trading such as changes in price, interest that accrued, or change in the issuer’s condition. The AWC states that Hill had no reasonable basis to believe the trades were suitable, especially considering the commissions he earned as a result of those transactions. The document found that he recommended one customer purchase securities on margin for their account, which was inconsistent with the customer’s investment objectives, income needs, and other available assets, making the transaction qualitatively unsuitable.
Hill was sanctioned to a 15-month suspension, civil and administrative penalties and fines in the amount of $5,000, and a disgorgement of $45,000.
Hill has been the subject of seven customer complaints between 2000 and 2015, according to his CRD report:
- August 2015. “Claimant alleges that between 2003 and 2014, account was subject to churning, unauthorized trading, unsuitability and breach of fiduciary duty.” The customer sought $1.6 million in damages and the case was settled for $1 million.
- June 2001. “Clients want Miller & Schroeder to repurchase unspecified municipal bonds sold to them for $160,000. They allege unsuitability in their purchases of higher risk, unrated bonds. Clients purchased $5,000 of Tarrant County Health Facilities development bonds on May 28, 1997; $25,000 Chicago II Health Facilities (SP) revenue bonds on July 31, 1998; $10,000 Danforth Health Facility (SP) Corporate revenue bonds on August 31, 1998; $25,000 Tarrant County TX Health Facilities Development Bonds on December 3, 1998; and $40,000 Tarrant County Health Facility Development Bonds on May 28, 1997. Clients also purchased United Homes, Inc. Bonds, which is not named in their allegation, but based on the dollar figure given, is also included in their complaint as an unsuitable.” The customer sought $160,000 in damages and the case was settled for $1.
- June 2001. “Clients purchased $20,000 of United homes, Inc. in one account on January 29, 1998, and $10,000 of same bond issue in another account on the same date. Later, they sold half of each purchase. Clients also purchased $10,000 Minneapolis MN Health Facility Development Bonds on April 15, 1997. Clients allege that the purchases of United Homes and Minneapolis MN Health were unsuitable because of the higher risk and also that they were told by broker that bonds were unrated, but would be rated aaa in several weeks.” The customer customer sought $25,000 in damages and the case was denied.
- May 2001. “Customer alleges that her broker told her to sell RTW in order to buy United Homes, Inc., which subsequently went into default. United Homes, inc. was purchased on November 20, 1997. Customer alleges that her broker told her that United Homes was a “safe” investment. Customer also claims that she is disabled and in a lower income bracket, and that, for these reasons, the investment was unsuitable.” The customer sought $15,000 in damages and the case was denied.
- February 2001. “Client complained to the NASD regarding 23,000 paging network bonds. During the course of his complaint he alleged that the broker made unauthorized trades which he ratified.” The customer sought $25,328.75 in damages and the case was settled for $4,968.
- January 2001. “High yield municipal (heritage) bonds were sold to client and she was not suitable for this investment. Client was on assisted living by her home state at time of purchase
damage amount requested.” The client sought $5,000 in damages and the case was settled for $5,002.08. - October 2000. “Client alleges that broker did not inform him that CD’s purchased would cause him to incur a loss if sold in the market. They also allege that broker & firm misrepresented crossover refunded bonds as pre-refunded municipal bonds. Additionally broker did not advise them that FLMC notes would be subject to market risk when sold before maturity.” The customer sought $200,000 in damages and the case was settled.
In addition, pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Wells Fargo may be liable for investment or other losses suffered by Hill’s customers.
Erez Law represents investors in the United States for claims against former Wells Fargo financial advisor Jeffrey Alan Hill, who is alleged to make discretionary trades in customer accounts without the customer’s consent. If you were a client of Wells Fargo financial advisor Jeffrey Alan Hill or another firm, and have experienced investment losses, please call us at 888-840-1571 or complete our contact form. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies.
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