Shaun Hayes Subject of Texas Regulatory Action

Shaun Hayes (CRD #: 4963876), a broker formerly registered with Merrill Lynch, Pierce, Fenner & Smith, has been suspended in the State of Texas, according to his BrokerCheck record, accessed on December 15, 2024. If you want to know more about his alleged conduct as a broker, keep reading.

Texas State Regulatory Action

On November 12, 2024, the State of Texas alleged that Shaun Hayes executed a trading strategy from May 2020 through November 2022 involving complex and high-risk products for approximately 22 clients with conservative or mildly conservative risk tolerances.

The investments allegedly included leveraged and inverse exchange-traded funds (ETFs), and single stocks traded on the S&P 500, NASDAQ, and Russell 2000. These allegedly included micro-cap and small-cap stocks, as well as stocks in the biotech and energy sectors.

Further, these investments were allegedly high-risk, volatile, and intended for sophisticated investors. The state alleged that, as a result of this strategy, an investor identified as Client A lost nearly half her account value, Client B experienced losses of approximately $40,000, and Clients C lost approximately 20% of their account value.

Sanctions

Shaun Hayes consented to a suspension in all capacities for 140 days. His suspension began on November 12, 2024, and will end on April 1, 2025.

He also consented to an undertaking and agreed not to reapply for registration with the Securities Commissioner as a dealer, investment adviser, agent of a dealer, or an investment adviser representative until after the end of his suspension.

Texas State Securities Board Investigation

On June 12, 2024, the Texas State Securities Board alleged that Shaun Hayes engaged in unsuitable trading in client accounts in violation of Section 4007.105(a)(3)(A) of the Texas Securities Act.

Texas Securities Act

Section 4007.105(a)(3)(A) of the Texas Securities Act allows the Securities Commissioner to deny, suspend, or revoke the registration of any broker who has been found to engage in inequitable practice in the sale of securities.

What are Blue Sky Laws?

Blue sky laws like the Texas Securities Act are state securities regulations that provide investors with an extra layer of protection against fraud. They frequently also define what investments qualify as securities in the state.

Investor Disputes

On January 23, 2024, an investor alleged that Shaun Hayes engaged in constructive fraud, negligent misrepresentation, negligence, and violated California Corporation Code Section 25401 from October 2017 to March 2023. The client sought $103,386 and received a settlement of $90,000.

Several investors filed a dispute on July 29, 2022, alleging that Shaun Hayes altered an investment strategy without consulting them. They sought $190,000 in damages and received a settlement of $146,882.

On March 18, 2022, an investor filed a dispute alleging that Shaun Hayes failed to disclose material facts, mismanaged their assets, and executed unauthorized trades. This dispute sought $1 million in damages and was resolved in civil court.

FINRA Rule 2020

The misrepresentation of information related to investments violates FINRA Rule 2020, which prohibits the use of manipulative, deceptive, and otherwise unethical methods to influence an investor’s decisions. This rule also prohibits the omission of material facts. 

FINRA Rule 3260

FINRA Rule 3260 limits how brokers can use discretion when trading. Discretionary accounts must be approved in writing by the investor and accepted for discretionary trading by the firm. 

California Corporation Code

California Corporation Code Section 25401 prohibits the use of untrue statements or omissions of material facts in order to buy, offer, or sell a security in the state.

Background Information

Shaun Hayes has passed the following exams:

• Series 66 – Uniform Combined State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination
• Series 24 – General Securities Principal Examination

In the past, he worked for Merrill Lynch, Pierce, Fenner & Smith (CRD#:7691) and AXA Advisors (CRD#:6627).

Kurta Law Can Help

If you worked with Shaun Hayes 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 that 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.