In January 2014, FINRA announced that Hugh Robert Hunsinger Jr., previously employed by Lincoln Financial Advisors Corporation, was barred from association with any FINRA member in any capacity and ordered to pay $1,452,503.57, plus interest, in restitution to customers. The sanctions were based on findings that Hunsinger converted funds from the brokerage accounts of customers, his parents.

The findings stated that in total, Hunsinger transferred $1,452,503.57 from his parents’ accounts to bank accounts in his name. Neither of his parents had an account at the banks he transferred the money to, and neither authorized the transfer of funds from their brokerage accounts to Hunsinger or to accounts at the banks.

The findings also stated that Hunsinger engaged in securities fraud, willfully violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, FINRA Rule 2020 and NASD Rule 2120, by convincing his parents to agree to sell securities to purchase an annuity, even though he used the sales proceeds for other purposes. Hunsinger provided his parents with documents that purported to be designed for one of them and that contained information, based on an historical llustration, about withdrawals, contract values, cash surrender, average annual returns and standard death benefits. Hunsinger’s parents agreed to the recommendation and believed based on what their son told them, that their securities would be sold over time to purchase the annuity in a series of payments.

The findings also included that Hunsinger made repeated false statements to his parents, both orally and in writing, that the investments had been made, when they had not been made, and he was stealing their funds. Hunsinger falsely confirmed to his parents that he had purchased the annuity and represented that securities in their accounts would continue to be sold and money from the sales would continue to be transferred into the annuity over time. Although Hunsinger did not purchase an annuity for his parents, he continued to make disbursement requests, securities continued to be sold to satisfy those requests, and the proceeds continued to be distributed to Hunsinger’s or his parents’ bank accounts according to his direction.

FINRA found that Hunsinger misstated material facts and made misstatements in connection with the sales of securities. Each time one of his parents inquired about the annuity, Hunsinger falsely affirmed that he had purchased it, that the payments his parents were receiving were attributable to the annuity, and that the proceeds from securities sales were being transferred into it. At a certain point, the balances in his parents’ securities accounts were at or near zero; and a few months later, the annuity payments had stopped. When Hunsinger’s siblings confronted him, he admitted that he had not purchased an annuity for his parents. FINRA also found that Hunsinger failed to respond to FINRA requests that he provide information and documents related to its investigation.

It was unclear from FINRA’s announcement whether customers had initiated FINRA arbitrations or any other type of securities arbitrations. If you believe that you have suffered losses as a result of Hugh Robert Hunsinger’s misconduct, you may contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL 33324. By phone: 954.693.7577 or 800.718.1422.