Perhaps not long thereafter, in or about, November 2021, Financial Industry Regulatory Authority Public Disclosure reported that Dennis Daniel Herrera, following his association with Laidlaw Company (UK) Ltd., was referenced in a customer initiated investment related FINRA securities arbitration claim in which the customer sought $139,399.00 based upon the allegations that Herrera sold the customer unsuitable investments and also breached his fiduciary duties FINRA Arbitration No. 20-00036 (March 9, 2020). The claim alleges that the customer was placed into unsuitable investments at Aegis Capital Corp.
On November 10, 2005, while he was registered at Hunter Scott Financial LLC, a customer initiated investment related complaint involving Herrera’s conduct was resolved for $40,000.00 in damages based upon allegations that the customer was excessively charged on over-the-counter equities investment transactions executed in the customer’s account which also supposedly “poorly performed.”
On November 2, 2007, this time when he was registered at Mercer Capital Ltd. another customer initiated investment related complaint concerning Herrera’s activities was settled for $8,628.55 in damages supported by accusations that a stop loss order was executed on the customer’s over-the-counter equities holdings without the customer’s permission.
Then, again, on January 16, 2014, while registered with Blackbook Capital LLC, another customer initiated investment related complaint regarding Herrera’s conduct was resolved for $25,000.00 in damages based upon allegations that Herrera made misrepresentations to the customer concerning private placement investments; and effected stock trades in the customer’s account on an unsuitable and excessive basis. FINRA Arbitration No. 13-00771 (Jan. 16, 2014).
Seems confusing, perhaps it is.
Within the last twenty years, Herrera has been associated with nine (9) securities broker-dealers, seven (7) of which have been expelled for the violation of the federal securities laws or self-regulatory rules, or are otherwise defunct, including Blackbook Capital LLC (CRD No. 123234)( FINRA expelled the firm on 06/28/2016); Charles Vista LLC (FINRA expelled the firm on 01/02/2014); John Thomas Financial (CRD No. 40982)(FINRA expelled the firm on 10/31/2013); Mercer Capital Ltd. (CRD No. 104012)(terminated March 20, 2010); Hunter Scott Financial LLC (CRD No. 45559)(FINRA expelled the firm on 10/09/2014); Park Capital Securities, LLC (CRD No. 104206)( FINRA expelled the firm on 09/29/2005); J.P. Turner & Company, L.L.C. (CRD No. 43177)(terminated April 4, 2010).
Stockbroker Migration
It is not uncommon when stockbrokers, or more descriptively a “crew” of stockbrokers, associated with an expelled or rogue firm jump ship or migrate, en masse, to a new firm, where they continue to ravage, rob and plunder some unsuspecting corn farmer in Illinois. All they need is a telephone, a list of leads (usually in the form of customer account information that they steal from each other), and have some sort of house chop stock, or thinly traded bond, with a story to peddle to the unsuspecting investment public. Often, or at least sometimes, the real party in interest, or the “owners” of the respective pirate ship/branch offices, is a barred or expelled individual, or even long before the Sopranos, is an alleged, or sometimes even convicted, member of organized crime. Richard H. Walker, Director, Division of Enforcement U.S. Securities & Exchange Commission, The Involvement of Organized Crime on Wall Street (September 13, 2000). It is not just the Italians. One firm in New York, that had been compromised by the Russian Mafia, had more than twenty agents all posing as “Vlad,” the one idiot that was actually registered.
In any event, the term for this migration from expelled broker-dealer to soon to be expelled broker-dealer is called “cock-roaching.” FINRA News Release, September 15, 2015 “FINRA Sanctions 10 Former Global Arena Representatives as a Result of FINRA Crackdown on Broker Migration”); FINRA Targets ‘Cockroaching,’ Eyes Frontier-Fund Marketing – Focus on Funds – Barrons, Sept. 15, 2015 (“FINRA cracks down on “cockroach” brokers. Regulator bars 10 at New York broker-dealer Global Arena Capital Corp. after investigating brokers who migrated from an expelled firm”); Letter of October 25, 2015, U.S. Senator Edward Markey (D-Mass) to Richard Kethcum, Chair & Chief Executive officer FINRA (“with respect to the ‘cockroaching’ problem, FlNRA simply must do a better job of tracking and removing unscrupulous brokers from the industry.”).
Again, being associated with almost a dozen of these firms, with only a few actual complaints is quite remarkable. Moreover, as set forth below, it is entirely feasible, at least in one case, as Herrera testified that “he had no role in handling this customer’s account and was not responsible for any investment advice, or execution of any trades.” Customers, and customer account documents are stolen and passed around an office, from broker to broker, from firm to soon to be defunct firm. Lawyers want to sue everyone. However, Mr. Herrera seems to have been added as a party to one such action by an “non-attorney representative firm.”
At least one of these “firms” has been known to purchase or obtain customer account information from these rogue firms and/or brokers, and have been known to “cold-call” the investor victims with the promise of recovering lost funds in exchange for an up-front, non-refunable “consulting fee.”
The Quest For Expungement
It did not however stop Mr. Herrera from suing them or bringing an action in arbitration before the Financial Industry Regulatory Authority seeking to expunge his Public Disclosure record.
On July 20, 2020, Herrera filed an his expungement claim against BlackBook Capital LLC, Hunter Scott Financial LLC, John Thomas Financial, Charles Vista LLC, and Aegis Capital Corp. FINRA Arbitration No. 20-02282.
While Herrera initially sought the expungement of Occurrence Numbers 1330218, 1376926, 1649154, and 1763136, he withdrew his request for expungement of Occurrence Numbers 1376926 and 1649154. With the exception of Blackbook Capital, which only filed an answer, none of the Respondents, including the defunct or barred Respondents opposed Herrara’ request or appeared at the hearing. None of the customers also did not appear at the hearing.
At the hearing, Herrera testified that “he had no role in handling this customer’s account and was not responsible for any investment advice, or execution of any trades; and no role in discussing performance of investments or commissions. Claimant only received a salary and did not share in the commissions generated from the activity in the customer’s account.”
Herrera’s request for expungement was granted.
On September 11, 2020, Herrera a second expungement claim this time against expelled Hunter Scott Financial LLC, expelled John Thomas Financial, and Aegis Capital Corp. FINRA Arbitration No. 20-03220 seeking to expunge Occurrence Numbers 1649154 (“Customer A”) and 1376926 (“Customer B”) from his Public Disclosure records.
Adversarial Failure
According to one scholar, FINRA arbitrators accustomed to adjudicating genuinely contested disputes, “mistakenly expect that the lawyers and parties appearing before them will raise all relevant facts as well as applicable law and rules. They may also expect that, collectively, participating parties have some incentive to bring reasonably pertinent information to the adjudicator’s attention.” Edwards, Benjamin P., Edwards, Benjamin P., Adversarial Failure, Washington and Lee Law Review (Aug 2020).
According to Professor Edwards, one study of over a thousand expungement awards found that customers appeared only 13% of the time. See Honigsberg & Jacob, Deleting Misconduct: The Expungement of BrokerCheck Records, J. FINAN. ECON., See also, Lisa Bragança & Jason Doss, How Expungement-Only Cases Are “Gamed, Exploited and Abused” by Brokers, Financial Planning (Oct. 29, 2019). This same study found that brokerage firms “did not object or otherwise oppose the individual broker’s expungement request over 98% of the time.” Moreover, “[f]ew lawyers will assist customers and oppose expungements on a pro bono basis.”
The result is “adversarial failure” which occurs when parties to a dispute have either aligned interests or no real incentive to contest. The result is also an “alarmingly” high percentage of arbitration cases resolved by settlement or by stipulated awards where expungement relief has been granted.” Expungement Study of the Public Investors Arbitration Bar Association (October 16, 2013).
In fact, according to Investment News, most the Respondent broker-dealers have no interest in opposing expungement, particularly where there are no compensatory damages sought, they most often do not participate in arbitrator selection.
Stockbroker Recividism
Notably, brokers who successfully expunge complaints from their record “are 3.3 times as likely to engage in new misconduct as the average broker.” See Colleen Honigsberg & Matthew Jacob, Deleting Misconduct: The Expungement of BrokerCheck Records, J. FINAN. ECON. (2020).
In September 9, 2025, Herrera was the subject of another customer intiated, investment related FINRA securities arbitration claim where the customers allege breach of fiduciary duty, unsuitable investments, material misrepresentations, material omissions, breach of FINRA rules and breach of contract on the part of Registered Representative in relation to the customers investments. FINRA Arbitration No. 20-00036.
In fact, only a few weeks earlier on August 8, 2025, Herrera was the subject of a FINRA Enforcement Action which was resolved by way of Acceptance, Waiver and Consent (AWC No. 2022073724201).
According to the AWC, “between January 2019 and February 2023, Herrera recommended to two retail customers a series of trades that were excessive, unsuitable, and not in the customers’ best interests.” Again according to the AWC:
In September 2017, Customer A, then a 68-year-old plumber, opened an account at Aegis. Between January 2019 and February 2023, Herrera recommended 205 transactions in Customer A’s account resulting in an annualized turnover rate of 12 and an annualized cost-to-equity ratio of 25 percent. Customer A relied on Herrera’s advice and routinely followed his recommendations, and, as a result, Herrera exercised de facto control over the account. Herrera’s trading in Customer A’s account generated $123,557 in commissions and caused $270,219 in realized losses.
In February 2017, Customer B, then a 56-year-old oil and gas consultant, opened an account at Aegis. Between June 30, 2020, and December 2022, Herrera recommended 118 transactions in Customer B’s account resulting in an annualized turnover rate of six and an annualized cost-to-equity ratio of 28 percent. Herrera’s trading in Customer B’s account generated $34,943 in commissions and caused $88,760 in realized losses.
The level of trading that Herrera recommended in the two customers’ accounts was excessive. It was unsuitable for Customer A, and not in the best interest of either customer.
As set forth in the AWC, Regulation Best Interest, or Reg. BI’s Care Obligation, set f0rth at Exchange Act Rule 15/-1 (a)(2)(ii), according to FINRA, requires broker-dealers and their associated persons to exercise reasonable diligence, care, and skill to, among other things, have a reasonable basis to believe that a series of recommended transactions, even if in the retail customer’s best interest when viewed in isolation, is not excessive and is in the retail customer’s best interest in light of the retail customer’s investment profile.
No single test defines when trading is excessive, but factors such as the turnover rate, the cost-to-equity ratio, and the use of in-and-out trading in a customer’s account are relevant to determining whether an associated person has excessively traded a customer’s account in violation of Reg BI. The turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities. The cost-to-equity ratio measures the amount an account must appreciate just to cover commissions and other expenses. In other words, it is the break-even point where a customer may begin to see a return. A turnover rate of six or more, or a cost-to-equity ratio above 20 percent, generally indicates that a series of recommended transactions was excessive.
Prior to June 30, 2020, FINRA Rule 2111 required members and associated persons to have a reasonable basis to believe that a recommendation of a transaction or investment strategy involving a security or securities to any customer is suitable for the customer. According to FINRA:
Under Rule 2111.05(c), members and associated persons with actual or de facto control over an account were required to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, is not excessive and unsuitable for the customer in light of the customer’s investment profile.
FINRA Rule 2111 is still in effect, but as of June 30, 2020, it no longer applies to recommendations that are subject to Reg BI, and the element of control was removed from the quantitative suitability component.
As a result, Herrera was found to have willfully violated the Best Interest Obligation under Rule 151-1 (a)(l) of the Securities Exchange Act of 1934 (Regulation BI or Reg BI) and violated FINRA Rules 2111 and 2010. For these violations, Herrera was suspended for six months in all capacities, fined $5,000, and ordered to pay restitution of $158,500 plus interest.
The AWC also provides that Herrera “may not take any action or make or permit to be made any
public statement, including in regulatmy filings or otherwise, denying, directly or indirectly, any finding in this AWC or create the impression that the AWC is without factual basis.
Mr. Herrera’s suspension ended March 1, 2026. He is presently not associated with any member in any capacity.
