FSC Securities is a “franchise” broker-dealer, purports to be America’s largest networks of independent advisors, with more than “1,500 financial advisors” operating from more than 238 geographically dispersed “independent” branch offices “across the United States. FSC Securities is also part of the AIG Advisory Group
Barry G. Hartman
Until March 2013, Barry G. Hartman was a registered representative associated with a Missoula, Montana office of FSC Securities. In March 2015 Hartman was terminated from FSC Securities for violating Firm policies, including participating in an undisclosed outside business activity and an undisclosed private securities transaction.
While associated with FSC Securities, Hartman served on the board of directors of an unaffiliated privately-held company without providing written notice to the Firm in the form required by the Firm. Over the same time period, Hartman also participated in private securities transactions by personally investing approximately $450,000 in the company and by recommending that more than a dozen of his FSC Securities customers also invest in the company.
As a result, Hartman consented to be barred from the securities industry for life.
FSC Securities Responsibility
FSC Securities is however responsible for Hartman’s conduct. Section 20(a) of the [1934] Act provides that a person cannot lawfully engage in the securities business unless he is either registered as or associated with a broker-dealer. As the Court stated in Hollinger v. Titan Capital, 914 F.2d 1564 (9th Cir. 1990), “we see no basis in the statutory scheme to distinguish between those associated persons who are employees and agents on the one hand, and those who are independent contractors on the other. To exclude from the definition of controlling person those registered representatives who might technically be called independent contractors would be an unduly restrictive reading of the statute and would tend to frustrate Congress’ goal of protecting investors. Thus, we reject the argument that broker-dealers can avoid a duty to supervise simply by entering into a contract that purports to make the representative, who is not himself registered under the Act as a broker-dealer, an “independent contractor.”
Accordingly, Hartman’s customers ought to consult with counsel to determine their legal rights.
Guiliano Law Group
Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
