As a financial analyst and legal expert with over a decade of experience, I recognize the seriousness of the allegations against Donald Hancock and Moloney Securities. According to a recent SEC order, Mr. Hancock and his firm failed to exercise reasonable diligence and care when recommending highly risky GWG L Bonds to investors between 2020 and 2022. The SEC found that these speculative products were only suitable for investors with substantial financial resources and no need for liquidity, yet Moloney Securities allegedly recommended them without a reasonable basis.
The potential consequences for investors are significant. As the SEC noted, GWG Holdings disclosed that investors might lose their entire investment and that the company had doubts about its ability to continue as a going concern. This case highlights the importance of working with financial advisors who prioritize their clients’ best interests and conduct thorough due diligence on investment products. Complaints against financial advisors are not uncommon, and investors must remain vigilant.
Advisor’s background and past complaints
Donald Hancock (CRD# 828811) has worked in the financial industry for 48 years. He is currently registered with Moloney Securities in Manchester, Missouri, where he serves as CEO. While Mr. Hancock has an extensive background, it’s concerning to see these recent allegations of misconduct.
In addition to the SEC charges, Mr. Hancock is facing a pending customer dispute filed in September 2024. The investor alleges negligence and unsuitable recommendations related to a corporate bond investment, seeking over $359,000 in damages. While Mr. Hancock denies the allegations, the complaint raises further questions about his conduct.
Failure to comply with Regulation Best Interest
At the heart of the SEC’s case is the allegation that Mr. Hancock and Moloney Securities violated Regulation Best Interest. This crucial rule requires brokers and advisors to act in their clients’ best interests when making recommendations. The SEC found that the firm failed to understand the risks of GWG L Bonds, lacked a reasonable basis for recommending them, and did not adequately address conflicts of interest.
As a financial professional, I cannot stress enough the importance of adhering to Regulation Best Interest and putting clients’ needs first. Investors rely on their advisors to provide sound guidance and protect their financial well-being. When that trust is broken, the consequences can be devastating. FINRA’s suitability rule also emphasizes the importance of recommending investments that align with a client’s risk tolerance and financial objectives.
Lessons learned and protecting your investments
This case serves as a sobering reminder for investors to thoroughly vet their financial advisors and the products they recommend. Before working with an advisor, research their background and disciplinary history using FINRA’s BrokerCheck tool. Don’t hesitate to ask questions about an advisor’s qualifications, investment strategies, and potential conflicts of interest.
If you’ve suffered losses due to unsuitable recommendations or misconduct by a financial advisor, know that you have rights. Consulting with an experienced securities attorney can help you understand your options for seeking recovery.
As Warren Buffett famously said, “Risk comes from not knowing what you’re doing.” By staying informed, asking questions, and working with trusted professionals, investors can better protect their hard-earned money and secure their financial futures.
Did you know? According to a 2021 study by the University of Chicago, 7% of financial advisors have been disciplined for misconduct at some point in their careers. Additionally, the Federal Trade Commission estimates that investment fraud losses in the United States totaled over $3.3 billion in 2022, highlighting the importance of due diligence when selecting a financial advisor.
