A Pinehurst stockbroker has been barred by the Financial Industry Regulatory Authority for creating unsuitable investment decision suggestions to aged consumers.
Mercer Hicks III advisable numerous “high-hazard, illiquid investments” to five females from June 2014 to July 2017, according to the composed summary of a disciplinary listening to held by FINRA in Could. Most of the buyers had been in their 80s and “not monetarily innovative,” the regulator explained.
The girls invested almost $665,000 based mostly on suggestions from Hicks, who netted additional than $38,800 in commissions. He has been ordered to disgorge the “ill-gotten gains” to FINRA and will have to also pay back in excess of $7,600 in expenses linked with the disciplinary hearing.
FINRA began investigating Hicks just after the nephew of a 90-yr-old Whispering Pines girl contacted the firm with considerations about two non-traded Genuine Estate Investment Trusts that his aunt experienced invested in. These products and solutions differ from publicly traded REITs, which can be acquired and bought with relative relieve on a stock trade.
When the nephew attempted to market shares of the non-traded REITs to assistance spend for his aunt’s nursing household care, he learned that her $50,400 investments could not be simply converted into dollars. An expenditure in a non-traded REIT can consider more than 10 years to develop into liquid, in accordance to FINRA.
A FINRA examiner afterwards determined that Hicks had built identical tips to 3 other senior ladies in Pinehurst, where by he worked at a branch of the brokerage business Southeast Investments, and to a girl in Burlington.
A few of the buyers, whose comprehensive names have been not introduced by FINRA, lived in lengthy-time period treatment services. Just one of them died in 2019.
In its disciplinary ruling, FINRA wrote that Hicks, a veteran broker with 48 many years of experience, experienced a “seriously flawed” comprehending of the risky investments he was recommending. He advised investigators he experienced examine only a several web pages of the prospectus for a non-traded REIT and assumed that his prospects would acquire an “annual cash flow of 6 % of their financial commitment.”
Continue to, FINRA concluded that Hicks’ “lack of intent to hurt his clients is not a related mitigating component.”
“It does not lessen the excess weight of the aggravating variable of the advanced ages of the prospects, which we should consider,” FINRA wrote, introducing that Hicks’ recommendations proven a “clear pattern” of misconduct. “It does not erase the simple fact that Hicks’ misconduct, even if he did not intend it, harmed his consumers.”
The regulator stated that Hicks used the “directories of citizens of retirement communities in and about Southern Pines to recognize probable consumers and then to introduce himself to them by earning chilly calls.”
Subsequent FINRA’s final decision to bar him from the business, lawyers in New York, Florida and other states made on-line posts supplying free of charge lawful consultation to his previous shoppers.
Hicks was dismissed by two brokerage firms for coverage violations right before he joined Southeast Investments in 2014, according to FINRA’s web site. A spokesperson for Southeast Investments did not instantly respond to a concept in search of remark on Tuesday.