H.D. Vest Investment Securities, Inc. operates a network of over 4,500 independent registered representatives located in branch offices throughout the United States. One such individual, Lewis J. Hunter was a registered representative of HD Vest when he stole more than $300,000 from his customers. According to Hunter, his customers would be investing ion high yield “guaranteed” foreign and domestic bank investments. However, in reality, Hunter used the funds to pay for personal expenses.
Hunter concealed his theft by fabricating bank documents and account statements. Hunter’s victims include an elderly couple from whom he stole several hundred thousand dollars in 2011 by recommending an investment in a Canadian bank, which Hunter assured them was guaranteed. Hunter also provided them with two Guaranteed Investment Certificates (“GICs”), for $250,000 purportedly issued by HSBC Bank Canada and which guaranteed monthly interest payments of 15% for two years. In reality, Hunter did not make the investment with HSBC Bank Canada. Instead, Hunter fabricated documentation of the GICs and used the funds to pay for various personal and business expenses, and to make phony interest payments to other victims.
After receiving at least one reported customer complaint which alleged that Hunter had forged letters of authorization removing funds from a customer account, H.D. Vest did not fire Hunter, instead they “permitted him to resign” for “facilitating the transfer of undisclosed investments away from the firm and depositing customer funds into an outside business in which he was affiliated.”
Hunter Was Convicted of Larceny and Indited for Mail Fraud
Hunter, who was also charged and convicted of larceny in 1985 long before his association with H.D. Vest, Hunter has been the subject of at least seven disclosed customer initiated investment related complaints alleging theft or inappropriate conduct including two cases in which H.D. Vest denied all liability and one case that was settled only after it appears be have been vigorously litigated and defended in arbitration for a period of almost two years.
In December 2014, Hunter was indicted for mail fraud and wire fraud in the United States Court for the Eastern District of Michigan.
H.D. Vest was Fined by the SEC for Failure to Supervise
However, today, H.D. Vest consented to a fine of $225,000 by the United States Securities & Exchange Commission for for failing to reasonably supervise Hunter with a view to preventing and detecting Hunter’s fraudulent scheme. According to the SEC, If H.D. Vest had reasonable policies and procedures concerning the review of third-party disbursements to its registered representatives from customer brokerage accounts or to entities controlled by its registered representatives, H.D. Vest likely could have prevented and detected Hunter’s misappropriation of customer funds.
In addition to H.D. Vest’s legal responsibility based upon its admitted failure to supervise Hunter, H.D. Vest is also responsible for Hunter’s conduct under the common law agency principles, the doctrine of respondeat superior, as a “control person” pursuant to Section 20(a) of the Exchange Act of 1934, 15 U.S.C. § 78t.
Victims of Hunter’s scheme should 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.