Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Michael Braun (Braun), previously associated with Bb & t Securities, LLC, has at least one disclosable event. These events include one tax lien, alleging that Braun recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 24, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the\<char_lb_r>\, public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted against Hamlin Capital Advisors, LLC (Hamlin Advisors) and Michael Ferrell Braun (together, Respondents). In anticipation of the institution of these proceedings, Respondents have submitted Offers of Settlement which the Commission has determined to accept. The Commission finds that this matter concerns failures to timely and fully disclose material conflicts of interest and related violations by Hamlin Advisors, a registered municipal advisor, and its associated person and Managing Director, Braun, including violations of various Municipal Securities Rulemaking Board (‘MSRB’) rules by each Respondent, and related breaches of fiduciary duty by Hamlin Advisors with respect to its disclosure violations. From September 2017 to at least April 2022 (the ‘Relevant Period’), Hamlin Advisors and Braun provided advice to certain charter schools (directly or indirectly through related borrower entities) (collectively, the ‘Charter School Clients’) on the issuance of municipal bond offerings totaling over $500 million in aggregate principal amount. In each of these issuances, Hamlin Advisors’s affiliate, a registered investment adviser (‘Hamlin Affiliate’), purchased either all or a substantial portion of the offered bonds. In most instances, Hamlin Affiliate also acted as compensated bondholder representative. This affiliate relationship created a material conflict of interest which was not timely disclosed to the Charter School Clients until several days or sometimes weeks after Hamlin Advisors began advising on the structure, timing, and terms of the particular offerings at issue. Braun provided the advice to the Charter School Clients and was responsible for providing the conflicts disclosure and the agreements for municipal advisory services. When Hamlin Advisors and Braun did disclose that a material conflict of interest existed because of Hamlin Advisors’s affiliation with Hamlin Affiliate, the disclosure was inadequate because it only disclosed that the firms had certain common ownership and both firms could ‘receive fees.’ It did not disclose that Hamlin Advisors had a financial incentive that was opposed to the interests of the Charter School Clients, due to its affiliation with the Hamlin Affiliate. Further, Hamlin Advisors’s disclosure was inadequate because it did not adequately describe the nature, implications, and potential consequences of the conflict, and did not disclose how it planned to manage and mitigate the conflict. In addition, in their advisory agreements with the Charter School Clients, Hamlin Advisors and Braun did not accurately describe the scope of Hamlin Advisors’s municipal advisory services for the deals at\<char_lb_r>\, issue. Finally, Hamlin Advisors’s written supervisory procedures were not\<char_lb_r>\, reasonably designed to achieve compliance with the applicable securities laws and regulations, including the applicable MSRB rules. As a result of the conduct described herein, Respondents violated Section 15B(c)(1) of the Exchange Act (prohibiting violations of MSRB Rules), and MSRB Rules G-17 and G-42 and Hamlin Advisors violated Section 15B(c)(1) of the Exchange Action (fiduciary duty) and MSRB Rule G-44.
In the financial industry advisors must meet the requirements of the SEC’s Regulation Best Interest (Reg BI) in providing investment advice and services. Reg BI established a ‘best interest’ standard for brokerage firms and registered representatives. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonable understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. Using the foregoing information, the associated person then must consider reasonably available investment option to accomplish the investor’s goals as well as alternative investment options that may be cheaper or other important qualities. Finally, the advisor must conclude that there is a reasonable basis to believe that the recommendation being provided is in the investor’s best interest.
An advisor must understand the type of account, securities, and their client in order to meet their care obligations. The type of securities account has the potential to greatly affect retail customers’ costs and investment returns. Different types of securities accounts can offer different features, products, or services, and not all types of accounts or services would be in every investor’s best interest.
Braun has been in the securities industry for more than 10 years. Braun has been registered as a Broker with Bb & t Securities, LLC since 2013.
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.
