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UPDATE! Investigation of DAVID J. HACKNEY and LPL FINANCIAL

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03
Aug

UPDATE! Investigation of DAVID J. HACKNEY and LPL FINANCIAL

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David J. Hackney and LPL Financial

Have you lost money with financial advisor David J. Hackney from Chicago, Illinois?  We are currently investigating allegations made by the Illinois Securities Department against David Hackney.  The Illinois Securities Department alleged that Hackney excessively traded or churned several customers’ accounts.  In June 2015, Hackney’s securities licensed was revoked in IllinoisFINRA, the Financial Industry Regulatory Authority, previously barred Hackney from the securities industry in May 2014 for failing to respond to an investigation into his conduct.

Hackney was alleged to have excessively traded several customers’ accounts.   One of the most common ways to determine whether the account was excessively traded or churned is to determine the annual turnover ratio.  This ratio shows how often the securities in the account are bought or sold within a year.  Authority has held that an annual turnover of 4 or more is a “presumption” of churning, and an annual turnover of 6 or more is a “conclusion” of churning.  During 2012, one customer had a turnover of 7.28, and another customer had a turnover of 6.66.  During 2013, one customer had a turnover of 23.46, and another customer had a turnover of 15.51.

Another way to determine whether there was excessive trading is the cost equity ratio.  This ratio takes the commissions generated by the trading, divided by the average value of the account.  This ratio essentially determines the returns that an account needs to make just to break even.  With Hackney’s trading, during 2012, one customer had a cost equity ratio of 24%, while another had 23.8%.  During 2013, one customer had a cost equity ratio of 101%, while another had 72.5%.  That means that the first client had to double their money just to cover the costs of the trading.  The Illinois Securities Department alleged that this trading was unsuitable and fraudulent.

David Hackney was a registered representative and financial advisor with LPL Financial from March 2006 to February 2014.  He worked at a branch office in Chicago, Illinois.

Broker-dealers like LPL Financial have a responsibility to adequately supervise all representatives who are registered through their firm, including investments sold by their registered representatives.  Broker-dealers also must take steps to ensure that their financial advisors follow all securities rules and regulations, such as to refrain from excessively trading a customer’s account.  When broker-dealers fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.

Our firm represents investors throughout the country who are victims of financial advisors’ negligence and fraud.  Our firm has offices in Denver and the Seattle-area, but we continue to represent investors throughout the U.S., including Chicago.  Both of our attorneys are licensed to practice law in Illinois, and we currently and previously have had multiple cases against LPL Financial.   If you have lost money with David Hackney or LPL Financial, and want to hear about ALL legal options, please visit https://www.israelsneuman.com/ or call us at 720-599-3505.

Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency. Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency. All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact. This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice. Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis. In contingent representation, clients may still be liable for costs.
10.0David P Neuman

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