Investor Alleges Donald Hancock Violated Suitability Rule

Donald Hancock (CRD #: 828811), a broker registered with Moloney Securities, is the subject of an investor dispute. This is according to his BrokerCheck record, accessed on November 22, 2024. Investors may have also worked with him through Moloney Securities Asset Management. Keep reading for more information. 

Investor Dispute

On September 30, 2024, an investor filed a dispute alleging Donald Hancock violated the suitability rule and engaged in negligence in 2021. The client seeks $359,325.61 in damages in this pending dispute.

FINRA Rule 2111

FINRA Rule 2111 requires brokers to take investors’ profiles into account when recommending investments. An investor’s profile describes their risk tolerance, tax status, and other characteristics.

Investors who rely on brokers for recommendations may be able to recover their losses by pursuing FINRA arbitration.

What is Broker Negligence?

Many types of broker misconduct may qualify as negligence, including unsuitable investment recommendations, failure to supervise, and failure to follow instructions.

Investors who believe their losses are the result of broker negligence may be able to recover their funds through FINRA arbitration.

SEC Regulatory Action

On September 27, 2024, the Securities and Exchange Commission filed a regulatory action against Moloney Securities Company, Donald Hancock, David La Grange, and Laura Barnes, alleging failure to comply with Regulation Best Interest with regard to recommendations of L Bonds offered by GWG Holdings between June 30, 2020, and approximately January 15, 2022.

According to the SEC, GWG Holdings allegedly disclosed during this period that its L Bonds involved a high degree of risk, could be considered speculative and illiquid, and were only suitable for investors with significant financial resources. The company allegedly also disclosed certain factors in November 2021 that raised doubt about its ability to continue as a going concern.

The SEC alleges that Moloney Securities Company and Donald Hancock, as its CEO, failed to exercise reasonable diligence, care, and skill to understand the risks, costs, and potential returns associated with L Bonds before recommending them. The firm and other defendants allegedly also recommended L Bonds to clients without a reasonable basis to believe that L Bonds were in their best interest given the information in the clients’ investment profiles.

As the company’s CEO, Donald Hancock was allegedly responsible for the firm’s violations of Regulation Best Interest, including a failure to establish supervisory procedures designed to identify, disclose, manage, or eliminate conflicts of interest related to investment recommendations.

Further, the firm allegedly failed to disclose the conflicts of interest created by recommendations of L Bonds by David Hancock and other employees with personal ownership of GWG Holdings securities.

The SEC alleged that Donald Hancock, David La Grange, and Laura Barnes failed to comply with the Care Obligation and willfully violated the General Obligation of Regulation Best Interest and Moloney Securities Company willfully violated the General Obligation of Regulation Best Interest.

What is Regulation Best Interest? 

Regulation Best Interest expanded on the requirements of FINRA Rule 2111, which defines suitable investment recommendations. In addition to limiting their recommendations to investments that suit their investors’ needs, brokerage firms must also uphold a Duty of Care, a Conflict of Interest Obligation, and a Disclosure Obligation. These obligations and duties require brokerage firms to disclose conflicts of interest and, prior to recommending a security, research the market for investments that could offer similar benefits at a lower cost. 

Sanctions

The SEC ordered Donald Hancock to cease and desist from violating Regulation Best Interest, and ordered him to pay the following:

• $50,000 fine
• $7,331 disgorgement
• $1,010 penalty

SEC Investigation

On May 11, 2023, the SEC stated it was investigating Donald Hancock and potential rule violations of Regulation Best Interest. 

Background Information 

Donald Hancock has passed the following exams: 

• Series 63 Uniform Securities Agent State Law Examination 
• Series 65 Uniform Investment Adviser Law Examination
• Series 79TO Investment Banking Registered Representative Examination 
• Series 99TO Operations Professional Examination 
• Series 57TO Securities Trader Exam
• Series 52TO Municipal Securities Principal Examination 
• SIE – Securities Industry Essentials Examination 
• Series 55 Limited Representative-Equity Trader Exam 
• Series 5 Interest Rate Options Examination 
• Series 7 General Securities Representative Examination 
• Series 27 Financial and Operations Principal Examination 
• Series 4 Registered Options Principal Examination 
• SEries 53 Municipal Securities Principal Examination 
• Series 24 General Securities Principal Examination 

He is a registered broker in 33 states and is a registered investment adviser in Missouri. 

Donald Hancock has registered with the following firms: 

• Moloney Investment Advisory (CRD #: 282140) 
• Moloney Securities Co (CRD #: 38535) 
• Hancock Investment Advisors (CRD #: 117958) 
• Hancock Securities Group (CRD #: 103260) 
• D.R. Hancock & Company (CRD #: 10610) 
• A.G. Edwards & Sons (CRD #: 4) 
• R. Rowland & Co. Incorporated (CRD #: 911) 

Kurta Law Can Help

If you worked with Donald Hancock and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.