As a former financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of cases involving allegations of misconduct by financial advisors. The recent complaint against Mike Hoye, a Schaumburg, Illinois-based advisor with Ausdal Financial Partners, is a prime example of the serious consequences that can arise when an advisor allegedly violates their duties to clients.
According to the complaint filed in July 2024, Mr. Hoye is accused of violating federal and state securities laws, breaching contract, committing fraud, breaching his fiduciary duty, and acting negligently in connection with a client’s investment in GWG L Bonds. The pending complaint alleges damages of a staggering $280,000.
For investors, allegations like these can be incredibly concerning. When you entrust your hard-earned money to a financial advisor, you expect them to act in your best interests and adhere to all applicable laws and regulations. Any breach of that trust can have devastating financial and emotional consequences.
The Advisor’s Background and Broker-Dealer
Mike Hoye has been in the securities industry for 26 years and has been registered with Ausdal Financial Partners as a broker and investment advisor since 2009. Prior to that, he was registered with several other firms, including Waterstone Financial Group, Royal Alliance Associates, and World Group Securities.
According to his BrokerCheck report, Mr. Hoye has passed numerous securities industry exams, including the Series 7 (General Securities Representative), Series 63 (Uniform Securities Agent State Law), and Series 65 (Uniform Investment Adviser Law). He is licensed to conduct business in multiple states, including Florida, Illinois, Iowa, and New York.
It’s worth noting that this is not the first complaint against Mr. Hoye. While every advisor can face the occasional disgruntled client, a pattern of complaints can be a red flag for investors.
Understanding FINRA Rules and Regulations
The Financial Industry Regulatory Authority (FINRA) is responsible for overseeing the activities of broker-dealers and their registered representatives. FINRA has established a set of rules and regulations designed to protect investors and ensure the integrity of the securities industry.
Some key FINRA rules that may be relevant in this case include:
- FINRA Rule 2111 (Suitability): Requires brokers to have a reasonable basis for believing that a recommended transaction or investment strategy is suitable for the customer, based on their investment profile.
- FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices): Prohibits brokers from effecting any transaction in, or inducing the purchase or sale of, any security by means of any manipulative, deceptive, or other fraudulent device or contrivance.
As the old saying goes, “trust, but verify.” It’s crucial for investors to thoroughly research any potential advisor or investment opportunity before committing their money.
The Consequences of Advisor Misconduct
When a financial advisor engages in misconduct, the consequences can be severe. In addition to the potential financial losses suffered by clients, the advisor may face disciplinary action from FINRA, including fines, suspensions, or even a permanent bar from the securities industry.
Moreover, the advisor’s broker-dealer may also face liability for failing to properly supervise their registered representatives. In some cases, the firm may be required to compensate clients for their losses.
According to a 2019 study by the Public Investors Arbitration Bar Association, a prominent legal association, around 40% of FINRA-registered representatives have at least one customer complaint on their record. This alarming statistic underscores the importance of due diligence when choosing a financial advisor.
The case against Mike Hoye serves as a sobering reminder of the risks inherent in working with a dishonest or incompetent financial advisor. As an investor, it’s essential to stay vigilant, ask questions, and don’t be afraid to walk away if something doesn’t feel right. Your financial future is too important to leave in the wrong hands.
