Kerry Lee Hoffman of Mundelein Illinois a stockbroker formerly registered with LPL Financial LLC has been charged by Securities and Exchange Commission (SEC) in a Complaint which alleged that Hoffman engaged in securities fraud through his offer and sale of unregistered GT Media Inc. securities. United States Securities and Exchange Commission v. Kerry L. Hoffman et al. Civil Action No. 19-cv-4409 (July 1, 2019).
According to the Complaint, from July of 2015 to July of 2018, $3,300,000.00 had been accumulated by Hoffman and the co-defendant, Thomas V. Conwell, who was convicted for cheating investors. The funds were raised by Hoffman and Conwell from forty-six investors when both were employed in some capacity by GT Media.
Between August of 2015 and January of 2018, $350,000.00 in GT Media convertible promissory notes and $500,000.00 of GT Media stock had been offered and sold by Hoffman. The Complaint indicated that Hoffman’s offer and sales of GT Media were made to LPL Financial customers without him disclosing the transactions to the securities broker dealer. Allegedly, customers’ investments were purchased outside of their LPL Financial accounts. The Complaint stated that Hoffman was compensated $50,000.00 from GT Media for his sales efforts. SEC also alleged that a $77,600.00 loan had been made by Hoffman to GT Media which was repaid using investor funds.
The Complaint additionally stated that when customers of LPL Financial had been solicited by Hoffman to invest in GT Media, they were not made aware that Hoffman was conflicted. In particular, SEC alleged that investors were not told that Hoffman received commissions and warrants from GT Media and that the money Hoffman loaned to GT Media was repaid using investor funds. The regulator also alleged that a large advisory customer of Hoffman’s had been deceived into purchasing a GT Media convertible promissory note by way of Hoffman omitting that a portion of the customer’s funds would be used for repaying the loan that he made to GT Media.
SEC alleged that Hoffman’s conduct was violative of Securities Exchange Act of 1934 Sections 10(b) and 15(a); SEC Rule 10b-5; Securities Act of 1933 Section 17(a); and Investment Advisers Act of 1940 Sections 206(1) and 206(2).
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Hoffman has been identified in five customer initiated investment related disputes which pertain to allegations of his misconduct while employed with securities broker dealers including LPL Financial. Specifically, a customer filed an investment related arbitration claim involving Hoffman’s activities in which the customer requested $550,000.00 in damages based upon accusations that the customer had been placed into an unregistered, fraudulent security by Hoffman. FINRA Arbitration No. 19-01913 (July 17, 2019).
Hoffman is referenced in another customer initiated investment related arbitration claim where the customer sought more than $5,000.00 in damages founded on allegations of Hoffman giving the customer bad investment advice in regard to the liquidation of a variable annuity and the purchase of an inappropriate, non-registered security in April of 2017. FINRA Arbitration No. 19-02222 (Aug. 7, 2019). Another customer filed an investment related arbitration claim concerning Hoffman’s conduct in which the customer requested $420,000.00 in damages supported by accusations that between June of 2015 and March of 2017, stock recommendations were not suitable. FINRA Arbitration No. 19-03026 (Oct. 7, 2019).
Hoffman is additionally the subject of a customer initiated investment related arbitration claim where the customer sought $170,000.00 in damages based upon allegations that (1) investment recommendations made by the stockbroker failed to be suitable and (2) the customer was placed into inappropriate, unregistered stock products by Hoffman while he was associated with LPL Financial. FINRA Arbitration No. 19-02634 (Oct. 16, 2019).
Hoffman was terminated by LPL Financial on September 7, 2018 founded on accusations that he acted as a consultant for GT Media without having disclosed that information to the securities broker dealer or otherwise procured its approval; and customers of LPL Financial had been offered and sold investments by Hoffman through this outside company. Hoffman was subsequently employed by Union Capital Company between September 7, 2018 and June 28, 2019.
