Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Brad Hare (Hare), previously associated with Windsor Street Capital, Lp, has at least one disclosable event. These events include one tax lien, alleging that Hare recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 10, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Brad Hare (‘Hare’ or ‘Respondent’). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement which the Commission has determined to accept. The commission finds that on December 3, 2024, a final judgment was entered by consent against Hare, permanently enjoining him from future violations of Section 15(a) of the Exchange Act, as set forth in the judgment entered in the civil action entitled Securities and Exchange Commission v. Brad Hare, et al., Civil Action Number 24-CV-12134, in the United States District Court for the Northern District of Illinois. The Commission’s complaint alleged that from at least April 1, 2018, Mammoth, through Hare, as part of a regular business, engaged in the buying and selling of securities for Mammoth’s own account. The complaint alleged that Mammoth, through Hare, bought and sold billions of newly issued shares of penny stock securities issuers and generated millions of dollars from those sales without complying with the SEC’s mandatory dealer registration requirements under the federal securities laws. The complaint also alleged that Mammoth’s business model included repeatedly purchasing convertible notes, a type of security, from penny stock issuers and penny stock debtholders, converting the notes into stock at a large discount from the prevailing market price, and selling the newly-issued shares into the public markets for a substantial profit. The complaint alleged that Mammoth, through Hare, acquired approximately 47 convertible notes involving 19 different companies issuing stock, converted those notes into approximately 11 billion shares, and gained over $2.5 million dollars in net profits. Neither Mammoth nor Hare was registered with the Commission as a broker-dealer nor was either associated with a registered broker-dealer during the relevant period.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Material information always includes information concerning the investor as well as the cost of the recommendation. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, a brokerage firm should not depend solely on information from the issuer regarding a company, but must perform its own thorough investigation.
Another protective measure for investors is to mandate broker discloses. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters. FINRA has recognized that recent studies offer evidence showing that brokers with a past history of regulatory and customer complaint issues are more likely to have such issues in the future. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Hare has been in the securities industry for more than 8 years. Hare has been registered as a Broker with Windsor Street Capital, Lp since 2015.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
