Michael Young Hamilton of Fort Myers, Florida, a stockbroker registered with Centaurus Financial Inc., is the subject of an enforcement action initiated by the United States Securities and Exchange Commission in which the regulator is seeking sanctions against Hamilton based upon allegations that Hamilton recommended corporate bonds that were not in his customers’ best interest. SEC Case No. C-08829 (August 24, 2023).
The SEC alleges the Registered Representative potentially recommended investment(s) that were not in his client(s) best interest and as such, may have violated Rule 151-1(a) of the Securities Exchange Act of 1934, known as Regulation Best Interest, by failing to comply with the Care Obligation found in Rule 151-1(a)(2)(ii).
Regulation Best Interest or “Reg BI,” which became effective on June 30, 2020, established a standard of conduct for securities broker-dealers or “brokerage firms” and their associated persons or “stockbrokers,” and “financial advisors” when they “recommend” securities transactions to retail customers. Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).
Reg BI requires a brokerage firm and its associated persons or registered representatives, when making a “recommendation” to a retail customer of any securities transaction or investment strategy involving securities (including account recommendations) to act in the best interest of the retail customer without placing the financial or other interest of the member or associated person ahead of the interest of the retail customer.
The SEC is reportedly pursuing a bar, cease and desist order, fines, and disgorgement. This case stems from activities conducted while Hamilton was employed by Centaurus Financial Inc. SEC alleges that Hamilton may have violated Securities Exchange Act of 1934 Rule 151-1(a), known as Regulation Best Interest, by failing to comply with the Care Obligation.
Financial Industry Regulatory Authority (FINRA) Public Disclosure additionally shows that on March 6, 2007, a customer initiated investment related complaint involving Hamilton’s conduct was settled to resolve allegations that Hamilton was negligent, made misrepresentations of material fact, breached a contract, and breached his fiduciary duties in connection with the sale of mutual funds during the time that Hamilton was associated with Raymond James Associates Inc.
Hamilton has been associated with Centaurus Financial Inc. in Ft. Myers, Florida, since October 30, 2015.
