Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that FINRA’s Department of Enforcement has recently brought disciplinary proceedings against broker/adviser Mercer Hicks, III (CRD # 245170). According to the December 20, 2019 Complaint filed by FINRA, Mr. Hicks, III is alleged to have engaged in unsuitable recommendations to five customers who are senior citizens.
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking with investors who have complaints and/or concerns regarding Mr. Hicks, III and the handling of their accounts.
Background of Mercer Hicks, III
Mr. Hicks, III first became registered in the securities industry in June 1972. He is currently registered with Charlotte, N.C. based Southeast Investments, N.C., Inc. (CRD # 43035). His prior registrations include Capital Investments Group, Inc. (CRD # 14752), from April 2009 to April 2014, Cantella & Co., Inc. (CRD # 13905) from July 2001 to April 2009 and American Investment Services, Inc. (CRD # 21111) from March 1997 to August 2001.
FINRA’s Allegations Against Mercer Hicks, III
FINRA’s December 20, 2019 Complaint against Mr. Hicks, III makes the following allegations:
- Between June 1, 2014 and July 31, 2017, Mr. Hicks, III made unsuitable investment recommendations to 5 customers who were senior citizens. Three of the five customers are widows;
- Hicks, III recommended the purchase of approximately $665,000.00 worth of speculative non-traded real estate investment trusts (REIT’s) and non-traded business development companies (DBC’s);
- The prospectuses for the investments stated that they involved a high degree of risk, were speculative, were not suitable for someone who requires immediate liquidity, guaranteed income, or seek short-term investments. The securities were only appropriate for those investors who could afford a complete loss of their investments;
- None of the five seniors were seeking to make speculative high-risk investments;
- Hicks, III failed to conduct reasonable due diligence on the REIT’s and BDC’s and failed to understand the risks and features associated with the investments before recommending them to the customers. Thus, he lacked a reasonable basis to recommend the investments; and
- Hicks, III received a seven percent commission from each sale totaling approximately $46,550.00 worth of commissions.
In addition to the above, the Complaint makes clear that before Mr. Hicks, III recommended the non-traded REITs and non-traded BDCs that are the subject of the Complaint, he had previoulsy recommended that four of the five senior customers at issue, invest their funds in variable annuities, which had guaranteed income riders. However, In 2014, Mr. Hicks, III began recommending that these senior customers liquidate some or all of their variable annuities (at times incurring withdrawal penalties) to invest in the non-traded REITs and non-traded BDCs.
As a result of the above alleged actions, Mr. Hicks, III has violated the following FINRA Rules:
- FINRA Rule 2111 which requires members and associated persons to have a “reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer…”; and
- FINRA Rule 2010 which requires member firms and associated persons to “observe high standards of commercial honor and just and equitable principles of trade.”
Mercer Hicks, III has a History of Violating Securities Rules and Member Firm Policies
In addition to the allegations of FINRA’s Department of Enforcement, FINRA BrokerCheck reveals Mr. Hicks, III has a history of being terminated for not following firm policy with regards to customers and customer accounts:
- On April 22, 2014 he was terminated from Capital Investment Group, Inc. for misrepresenting himself as a client when dealing with an insurance company;
- On April 1, 2009 he was permitted to resign from Cantella & Co., Inc. after an investigation revealed he had charged incorrect fees regarding the liquidation of clients’ annuities. He was asked to correct the fees and obtain clients’ initials evidencing the clients’ acceptance of such changes. It was later determined that Mr. Hicks, III and not the client had initialed the forms acknowledging the changes; and
- On March 11, 1997 Mr. Hicks, III was terminated from Robert Thomas Securities, Inc. (CRD # 10147) for not following firm policy with regard to listed equities (common & preferred stock).
If you or someone you know has or had a brokerage account or variable annuity with Mr. Mercer Hicks, III and have concerns regarding losses in your investments or possible fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.