Hornor, Townsend & Kent: Facing Allegations of Investment Misconduct and Regulatory Actions

As a financial analyst and writer, I feel compelled to discuss the current situation of Hornor, Townsend & Kent. If you’ve entrusted them with your savings, then it’s crucial to sit up and take notice. Despite their over 50 years of financial services, this Pennsylvania-based firm is under scrutiny for alleged misconduct clearly noted on their BrokerCheck record.

Known for carrying out securities transactions and advising on portfolio management, Hornor, Townsend, and Kent are currently weighed down by 17 disclosures, including harsh actions taken by the Financial Industry Regulatory Authority (FINRA). These allegations cast a shadow on the firm’s reliability, which is especially concerning given their approximately 700 registered representatives across 200 branches.

A Closer Look at Regulatory Actions

As an investor, being aware of a firm’s regulatory history is crucial. Recent events concerning Hornor, Townsend & Kent have sparked worry. Here are some incidents that stand out.

The Future Income Payments Debacle

The trouble began when a broker, seemingly unmonitored by Hornor, Townsend & Kent, sold $7 million worth of Future Income Payments (FIP) securities to 16 clients, many of whom were retirees and military pensioners. The activity was reminiscent of a Ponzi scheme and, because of inadequate supervision, breached FINRA Rule 3110, resulting in the firm being censured and fined a substantial $180,000.

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Variable Annuity Recommendations Gone Wrong

Following closely was another blunder involving variable annuities. The firm failed to adequately train its brokers in selling these products, leading to inappropriate recommendations for L-share variable annuities with long-term income riders to investors. Again, violating FINRA Rule 3110, the firm faced yet another censure and was hit with a heavy $275,000 fine.

In both these cases, whether it was the improper annuity suggestions or the FIP securities mishap, there’s a common thread of neglecting investor interests, which is alarming for any financial services firm.

The Cost of Doing Business with Hornor, Townsend, and Kent

Now, let’s delve into their fee structure:

  • Transaction-based fees: These include commissions on ETFs and additional costs for bond transactions.
  • Mutual fund fees: Sales loads that cut into your investment returns.
  • Commissions: Set fees on products like UITs, variable annuities, and closed-end funds.
  • Additional costs: Potential charges such as surrender fees, IRA account fees, and inactivity penalties.

When you factor in these expenses, asking if they’re eating too much into your returns is perfectly valid.

Evaluating Potential Conflicts of Interest

For Hornor, Townsend & Kent, managing conflicts of interest is critical for sustaining client confidence. Yet, the firm’s relationship with their parent company, Penn Mutual, is concerning. Could financial motives be influencing the firm’s product recommendations? This question is important as it could impact the quality of your investment experience.

Handling Misconduct Claims

If you’ve suffered losses because of Hornor, Townsend, and Kent’s alleged misconduct, recovery of your investment might be possible. I recommend discussing your situation with a securities lawyer. They can provide a free evaluation to determine if you have grounds for a FINRA arbitration claim.

The finance world can be rewarding, offering a path to grow wealth. Yet, caution and continuous education in investment matters are imperative. As Warren Buffett wisely said, “Risk comes from not knowing what you are doing.” With your hard-earned money on the line, ensuring that it’s in the right hands is non-negotiable. And remember, it’s not just about choosing a financial firm; it’s also about monitoring their actions. When it comes to advisors, a troubling financial fact to consider: Studies have shown a significant number of them have been disciplined for misconduct at some point in their career. One step towards safety is ensuring that you always check an advisor’s FINRA CRM number.

Stay vigilant, informed, and proactive about your financial future. After all, it’s not about how much you make but how much you keep and grow that counts.

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