According to Investment News, former Texas broker David Randall Lockey, allegedly “engaged in unsuitable short-term trading and switching in” four client accounts.
The allegations against Lockey were brought by the Financial Industry Regulatory Authority (FINRA). The regulatory agency alleges that for nearly two years, between May 2012 and March 2014, Lockley profited from improper trades involving mutual funds and unit investment trusts.
Investment News reported that Lockey’s questionable trading practices allegedly generated $75,730 for himself and his associated firm, Hilltop Securities independent Network (formerly SWS Financial Services). His victims reportedly followed Lockley from his previous firm and included a social worker, a bookkeeper for a family business, and a delivery service driver.
Unfortunately this was not the first time Lockleys trading practices had been called into question. According to Lockey’s BrokerCheck report, he was terminated from his previous firm, Edward Jones, for recommending strategies involving short-term holds on long-term investments and failing to timely respond to trade related inquiries from Edward Jones’ compliance department.
Mutual fund switching is a problem because it often exposes clients to unnecessary surrender charges and sales fees as well as subjecting clients to new surrender periods. It is often difficult for advisors to demonstrate that switching was in the best interest of the client and not for the purpose of generating commissions.
When a broker is found guilty of “switching” on a client’s account the brokerage firm that employs them may be liable for failure to supervise and responsible for investment losses.
If you suffered losses as a result of mutual fund switching and would like to speak with a securities attorney, please call The White Law Group at 1-888-637-5510 for a free consultation.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee.
For more information on the firm, visit www.whitesecuritieslaw.com.