- March 21, 2021
- Union Capital Company
Daniel Dillard (CRD#: 4289333) is an Investment Advisor and previously registered Broker at Union Capital Company in Austin, TX. He entered the securities industry in 2000 and previously worked for Sagepoint Financial, Inc.; LP Financial, LLC; Cuna Brokerage Services, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in January 2021, there is a customer complaint pending against Daniel Dillard: “Customers allege recommendations of certain private placement investments were not suitable, and that the Firm did not conduct proper due diligence on certain investments.” Damages of $1.5 million are requested.
In addition, Daniel Dillard has been the subject of three customer complaints, including one that remains pending, including the following:
● June 2020—”CLAIMANT ALLEGES THAT THE REPRESENTATIVE RECOMMENDED UNSUITABLE INVESTMENTS, MADE MISREPRESENTATIONS/OMISSIONS, AND BREACHED FIDUCIARY DUTIES.” The customer dispute is pending.
● December 2018—A tax judgment/lien was levied against Daniel Dillard for $59,428.33.
● September 2015—”WITHOUT ADMITTING OR DENYING THE FINDINGS, DILLARD CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT HE TRACKED HIS PROGRESS TOWARDS GENERATING $1,500,000 IN NET COMMISSIONS, AS PART OF A FINANCIAL INSTITUTION SERVICES AGREEMENT WITH A THIRD PARTY, USING HIS MEMBER FIRM’S YEAR-TO-DATE COMMISSION SUMMARIES. THE FINDINGS STATED THAT ONCE HE REACHED THAT AMOUNT, DILLARD TOOK AN INTERNAL FIRM FORM THAT HE SUBMITTED PREVIOUSLY TO HIS FIRM AND FALSIFIED IT BY ALTERING THE COMMISSION DISTRIBUTION PERCENTAGES TO REFLECT 25 PERCENT TO THE THIRD PARTY AND 75 PERCENT TO DILLARD, REUSING THE THIRD PARTY PRESIDENT’S PRIOR SIGNATURE, AND THEN SUBMITTING THE FALSIFIED FORM TO HIS FIRM. DILLARD CHANGED THE COMMISSION DISTRIBUTION PERCENTAGES AND REUSED THE THIRD PARTY PRESIDENT’S PRIOR SIGNATURE WITHOUT THE THIRD PARTY’S KNOWLEDGE, AUTHORIZATION, OR CONSENT. THE FINDINGS ALSO STATED THAT DILLARD’S ACTIONS CAUSED HIS FIRM TO MAINTAIN INACCURATE BOOKS AND RECORDS.” The FINRA sanction included a civil and administrative penalty/fine of $5,000 and a suspension of three months from working in any capacity as an investment advisor or broker beginning October 5, 2015 and ending January 4, 2016. For a copy of the FINRA sanction, click here.
● April 2013—“SUBMITTED AN ALTERED DOCUMENT REGARDING ADVISOR’S COMMISSION SPLIT WITH BANK, PREVIOUSLY SIGNED BY BANK CEO, TO THE FIRM. NO CUSTOMER IMPACT.” LPL Financial, LLC separated Daniel Dillard.
For a copy of Daniel Dillard’s FINRA BrokerCheck, click here.
Private placements is a broad term that describes securities that are not offered for sale through a public exchange. These can include promissory notes, private equity offerings, small, start-up businesses, etc. Private Placements are issued under Regulation D under the Securities Act of 1933. Regulation D provides exemptions from the more rigorous Securities and Exchange Commission (SEC) registration requirements and allows companies to offer and sell securities without extensive disclosures. The absence of standard disclosure requirements often creates.
The Securities Exchange Commission, federal courts, and FINRA have all found that brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. A brokerage’s firm’s due diligence obligation also stems from suitability obligations requiring the broker to have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. In order to meet the due diligence obligation, the brokerage firm and/or financial advisor must make reasonable efforts to gather and analyze information about the private placement, the issuer and its management, the business prospects of the issuer, the assets held by or to be acquired by the issuer, the claims being made by the issuer in the offering materials, and the intended use of proceeds of the offering. The failure to determine this and other material information would necessarily preclude a financial advisor from disclosing to a customer the material aspects of a transaction.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
FINRA has defined the standards in which investment recommendations made by brokerage firms and registered financial advisors are evaluated. The FINRA suitability rule focuses on three fundamental concepts: (1) reasonable basis suitability, (2) quantitative suitability, and (3) customer-specific suitability.
● Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
● Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
● Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, other investments, financial situation and needs, tax status, and investment objectives. Other considerations include the customer’s time horizon, liquidity needs, risk tolerance, and any other information disclosed by the customer.
Failure by a financial advisor to adhere to these requirements is evidence of negligence or, worse, investment fraud. If you as the investor can establish, at a minimum, negligent misconduct, you may be entitled to recover your investment losses.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at email@example.com.