Robert Earl Hillard (also known as Bob Hillard), the former President, CEO, and CFO of Arlington Securities, based in St. Louis, Missouri was sanctioned by FINRA for making unsuitable investment recommendations to his customers between December 31, 2018, and October 28, 2019, affecting 14 customers across 17 accounts. Letter of Acceptance, Waiver, and Consent (AWC) No. 2020065154601.
The regulator found that Hillard advised these clients to liquidate lower-cost Class A and Class C mutual funds to purchase investment-only variable annuities, resulting in additional annual fees totaling $67,026.47. The recommendations were deemed unsuitable as they offered minimal benefit relative to their increased costs and failed to account for customers’ individual investment profiles. Identical justifications were provided across accounts, indicating a lack of proper consideration for each customer’s unique financial circumstances.
The alleged violations include FINRA Rules 2111, 2330(b), and 2010, emphasizing the failure to ensure recommendations were suitable and aligned with high standards of commercial honor. Many of the affected accounts were already tax-advantaged, negating a primary benefit of the recommended variable annuities. Hillard was accused of prioritizing his income, as the conversion of Class C shares to Class A shares—reducing trail commissions—motivated his actions. Arlington Securities also faces scrutiny under FINRA Rules 3110, 2330(c), and 2330(d) for failing to implement adequate supervisory procedures. The firm did not effectively address red flags, such as identical rationales across accounts, nor ensure the recommendations complied with FINRA’s suitability requirements.
Sanctions imposed include a four-month suspension for Hillard from January 6, 2025, to May 5, 2025, a $10,000.00 fine, and restitution of $67,026.47 plus interest to affected customers. Arlington Securities was fined $50,000, censured, and ordered to enhance its supervisory procedures within 90 days.
Hillard’s employment history includes his tenure with Arlington Securities since 1990, where he served as President, CEO, and CFO.
