Lyhen Fiallo Barred by FINRA After Refusing to Cooperate with PFS Investigation

PFS Investments Inc. and former advisor Lyhen Fiallo (also known as Lyhen Hernandez) are at the center of a regulatory action that highlights how quickly a financial career can unravel when cooperation with industry rules breaks down.

What happened: the allegations against Lyhen Fiallo

Trust is the foundation of any advisory relationship. Investors expect transparency, clear communication, and full cooperation with regulators when questions arise. In this case, those expectations were not met.

In 2025, the Financial Industry Regulatory Authority (FINRA), a self-regulatory organization responsible for overseeing brokerage firms and their representatives, opened an investigation into Lyhen Fiallo. The inquiry centered on potential borrowing from a customer—an area that is heavily restricted across the securities industry due to the inherent conflicts of interest it creates.

Borrowing from clients is generally prohibited unless strict conditions are met, and even then, it must be properly disclosed and approved. These rules exist to protect investors from undue influence, pressure, or exploitation by individuals who have detailed knowledge of their finances.

Importantly, FINRA did not ultimately make a public finding that Lyhen Fiallo engaged in improper borrowing. Instead, the case turned on something equally significant: his refusal to cooperate with the investigation.

Under FINRA rules, when a registered representative is asked to provide information—such as emails, financial records, or testimony—compliance is mandatory. These requests are not optional. They are the basis of the regulatory system’s ability to function.

According to FINRA, Lyhen Fiallo did not provide the requested documents or information. As a result, in January 2026, FINRA issued a permanent bar in Case No. 2025088525001. This means he can no longer work for any FINRA-member firm in any capacity.

The distinction matters: the sanction was not based on proven customer borrowing, but on failure to comply with Rule 8210. Still, within the regulatory framework, refusing to cooperate is treated as a serious violation because it prevents regulators from determining whether misconduct occurred.

For reference, you can review his official record on FINRA’s BrokerCheck here:
CRD 4579582.

Cases like this are not isolated. According to research summarized by Investopedia, financial fraud and misconduct often involve breaches of trust, lack of disclosure, or misuse of client relationships—issues regulators are specifically designed to investigate and prevent.

Background: who is Lyhen Fiallo?

Lyhen Fiallo was registered with PFS Investments Inc., a broker-dealer affiliated with Primerica, from 2020 until April 2024. During that time, he operated out of Hialeah, Florida, serving clients in a community where many investors rely on advisors for guidance on long-term financial planning.

His business activities included:

• Selling investment-related products through Primerica-affiliated entities
• Participating in mortgage and referral services
• Providing financial guidance to retail investors, often in middle-income households

Prior to the FINRA bar, publicly available records showed no customer complaints, arbitration claims, or disciplinary history. On the surface, his record appeared typical of many advisors operating within large distribution networks.

However, there was one notable financial disclosure: an IRS tax lien totaling approximately $93,243 filed in Broward County, Florida. While tax liens do not automatically indicate misconduct, they can raise questions about personal financial management—an important consideration when evaluating someone entrusted with client assets.

Industry-wide, these issues are not uncommon. Studies have shown that a meaningful percentage of financial advisors have at least one disclosure event. More importantly, individuals with prior financial or regulatory issues may present higher risks for future problems, making due diligence critical for investors.

Understanding FINRA Rule 8210

FINRA Rule 8210 is one of the most important—and most straightforward—rules in securities regulation. It gives FINRA the authority to request documents, written explanations, and on-the-record testimony from brokers and associated persons.

The rule operates on a simple premise: regulators cannot protect investors if they cannot access the information needed to investigate potential misconduct.

When a broker refuses to comply with Rule 8210, FINRA typically imposes severe sanctions. In many cases, as with Lyhen Fiallo, that sanction is a permanent bar from the industry.

This strict enforcement approach reflects the broader structure of financial regulation in the United States. FINRA, while not a government agency, plays a central role in maintaining market integrity. Its authority depends heavily on the cooperation of the individuals it regulates.

Without that cooperation, oversight mechanisms weaken, and risks to investors increase. That is why refusal to provide information is treated as a standalone violation, regardless of the underlying allegations.

Consequences and lessons for investors

The outcome of this case carries several practical lessons for investors evaluating financial advisors, particularly those associated with large distribution firms like Primerica and PFS Investments Inc..

• Regulatory history matters: Even in the absence of proven misconduct, a refusal to cooperate with regulators is a serious red flag.
• Always verify credentials: Use tools like FINRA BrokerCheck to review an advisor’s background, including disclosures and employment history.
• Watch for conflicts of interest: Requests for personal loans or off-the-books financial arrangements should be treated with caution.
• Pay attention to financial stress signals: Liens, bankruptcies, or other personal financial issues may indicate elevated risk.

If you believe you may have been affected by questionable advice or conduct, you can learn more about common investor issues and potential next steps at financialadvisorcomplaints.com.

Investment fraud and unsuitable advice remain persistent concerns across the industry. These can range from excessive trading and high-fee product recommendations to more direct forms of misconduct, such as unauthorized transactions or misrepresentation of risk. Even smaller issues—like lack of communication or vague explanations—can signal deeper problems.

Ultimately, the case of Lyhen Fiallo underscores a key principle: transparency and cooperation are non-negotiable in financial services. When those break down, regulators act decisively—not only to address individual cases, but to reinforce standards across the industry.

For investors, the takeaway is straightforward. Ask questions. Verify information. And when something feels unclear or incomplete, take the time to look deeper before making financial decisions.