Danny S. Hood of Alpharetta, Georgia, a stockbroker formerly registered with LPL Financial LLC, has been barred from acting as an investment adviser or broker or associating with any investment advisories or brokerage firms in any capacity according to a Securities and Exchange Commission (SEC) Order containing findings that Hood effected unauthorized transactions in customer accounts and made omissions concerning fees. In the Matter of Danny S. Hood, Administrative Proceeding File No. 3-18247 (Oct. 11, 2017).
According to the Order, Hood consented to an SEC judgment that enjoined him from committing violations of Securities Act of 1933 Section 17(a), SEC Rule 17a-4(b)(4), and Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5. Securities and Exchange Commission v. Keystone Capital Partners, Inc., et al., Civil Action No. 1:17-CV-02873-RWS (N.D. Ga. Oct. 3, 2017).
The Order referred to the SEC’s Complaint from July 31, 2017, which alleged Hood and three others induced employees of the federal government to execute rollovers of their retirement savings held in thrift savings plans into variable annuities offered through Keystone Capital Partners. Apparently, Keystone Capital Partners, Inc. did business under the name of Federal Employee Benefits Counselors, and misled investors to assume that the federal government approved of the annuities recommended to investors.
Particularly, while making investment recommendations, Hood and others omitted information about surrender penalties and fees structures of annuities as compared to thrift savings plans, and furnished documents to customers that resembled a federal government agency seal. Hood furthered the scheme by communicating with the federal employees through the Federal Employee Benefit Counselor e-mail address instead of through the brokerage firm’s e-mail address, which directly violated the firm’s compliance procedures.
Apparently, additional steps were taken to hide the fact that the purchases of variable annuities did not occur through a federal government approved process. Specifically, brokerage accounts were opened without the knowledge or consent of the employees after the employees’ thrift savings accounts had already been liquidated to effect annuity purchases.
The Complaint alleged that commissions were received by Hood for each annuity transaction. Hood and others collectively sold two hundred variable annuities valued at $40,000,000.00; enabling him and his cohorts to earn a total of $1,700,000.00 in commissions.
Financial Industry Regulatory Authority (FINRA) Public Disclosure confirms that Hood is the subject of two more customer initiated investment related disputes regarding allegations of his misconduct while he was registered with LPL Financial, LLC. Specifically, on April 17, 2015, a customer filed an investment related written complaint concerning Hood’s activities, seeking $8,500.00 in damages supported by allegations of misrepresentation. On June 2, 2015, another customer filed an investment related written complaint involving Hood’s conduct, alleging that Hood effected the purchase of an annuity that was not suitable for the customer.
Hood’s registration with LPL Financial LLC was terminated on December 27, 2014. From December 11, 2014 to February 25, 2015, Hood was registered with BCG Securities, Inc., then with Summit Brokerage Services, Inc. from February 25, 2015 to August 28, 2015.
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