- September 6, 2023
- Lone Peak Advisors, LLC
Travis John Hudak (CRD#: 3128251) was a previously registered broker at Lone Peak Advisers, LLC and Transitional Broker, LLC.
He entered the securities industry in 1998 and previously worked for Lone Peak Advisers, LLC; Transitional Broker, LLC; H. Beck, Inc.; Gunnallen Financial, Inc.; Investment Management Corporation (FINRA expelled the firm in 2008); Eagle Gate Securities, Inc.; UBS Painewebber Inc.; and Fidelity Brokerage Services, Inc.
Current and Past Allegations of Conduct Leading to Investment Loss
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in August 2023, FINRA made a preliminary determination to recommend that disciplinary actions be brought against Travis Hudak alleging violations of FINRA Rules 2111, 2330, and 2010 in that Hudak made unsuitable variable annuity recommendations.
In addition, Travis Hudak has been the subject of several other disclosures, including the following:
- November 2021— “Lone Peak Advisers, LLC (LPA) and Transitional Broker, LLC (TB) terminated Mr. Hudak’s employment for cause based on his violation of LPA’s and TB’s written procedures, his employment agreement (IAR agreement), as well as the regulations of the SEC and FINRA. More specifically, LPA and TB understand that Mr. Hudak engaged in the following misconduct: Trading Violations – “Front Running” & “Trading Ahead”: While managing LPA client accounts, Mr. Hudak was using his discretionary trading authority in undisclosed brokerage accounts of his own and others. Mr. Hudak traded securities in these undisclosed accounts ahead of large block trades of the same securities in LPA clients’ accounts. Undisclosed Brokerage Accounts -“Holding Away”: Mr. Hudak failed to disclose certain brokerage accounts held by him, his immediate household, and other specific brokerage accounts controlled by him in which he had a personal interest. Improper Marketing Material: Mr. Hudak published two YouTube videos on his social media YouTube channel recommending to clients and the public two specific stocks, one of which is one of the same stocks involved in most of the trade violations already mentioned. Failure to Supervise: Mr. Hudak failed to properly document and maintain supervisory approval on all marketing, advertising, and sales literature prior to first use, most of which he created and for which he was responsible as the Delegated Compliance Officer all marketing. Undisclosed Office Location: For the year leading up to termination, Mr. Hudak generally worked at an undisclosed home office (not his residence) where he was conducting firm business. Intercepting Physical Mail for LPA and TB (Post Termination): Mr. Hudak intercepted and kept our company mail directly from the Post Office before it could be delivered. He had already been terminated for cause and notified.”
- September 2021—Investigation Initiated by Utah State Division of Securities, described “Mr. Hudak and I were brought into the Utah State Securities Division to resolve a customer complaint that was sent to them instead of directly to us. After working through the Utah Securities Division to resolve the complaint to the client’s satisfaction, I was told later by the Utah State Securities Division that they still have an ongoing investigation on Mr. Hudak regarding Advertising and Marketing material that Utah state employees were complaining about to the Utah State Securities Division. I was told I would eventually get an initial notice/information request. This was taking them a long time and before they sent their request, I updated them on Mr. Hudak’s termination. At that point I was told they escalated their investigation to the SEC who is our official regulator for Lone Peak Advisers. I have still not heard anything further from the Utah State Securities Division or the SEC.”
For a copy of Travis Hudak’s FINRA BrokerCheck, click here.
We Help Investors Recover Investment Losses
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.
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, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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