Hightower would allegedly tell investors their money was being invested in various projects, such as restaurants, movies, insurance contracts. However, DOJ alleges that none of these projects existed and that instead Hightower received more than $10 million from investors and used investor funds to pay earlier investors in a Ponzi Scheme and to pay himself and fund his lifestyle.
The DOJ also charges that Hightower also concealed from his clients that the Financial Industry Regulatory Authority (FINRA) had barred him in October 2015. The DOJ stated that if convicted, Hightower faces up to 20 years in federal prison for each count as well as possible fines.
According to BrokerCheck records kept by FINRA Hightower has six customer complaints – most of which relate to the alleged securities fraud activities.
Hightower’s activities in the sale of unapproved investment products – is a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds. When advisors convert or misappropriate funds they often created businesses or other vehicles to serve as a cover for the theft of funds. However, federal securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Hightower entered the securities industry in 1994. From June 2007 until September 2013 Hightower was registered with UBS Financial Services Inc. From September 2013 until June 2015 Hightower was associated with Legacy Assets Securities, Inc. out of the firm’s Houston, Texas office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.