- April 13, 2022
- Aegis Capital Corp
Scott Hananel (CRD#: 3080827) is a previously registered Broker.
He entered the securities industry in 1999 and previously worked for Aegis Capital Corp.; Gunallen Financial, Inc.; Milestone Group Management, LC; Salomon Grey Financial Management Corp.; and Royal Hutton Securities.
Current And Past Allegations Of Conduct Leading To Investment Loss
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March 2022, FINRA sanctioned Scott Hananel, levying a civil and administrative penalty/fine of $7,500, and suspending him from all capacities for 15 months beginning April 4, 2022, and ending July 3, 2023. The FINRA sanction states, “Without admitting or denying the findings, Hananel consented to the sanctions and to the entry of findings that he engaged in excessive and unsuitable trading in customer accounts. The findings stated that because Hananel decided which stocks to trade in his customers’ accounts and when to trade them, and exercised discretionary authority in connection with some of the trades in the accounts, he controlled the volume and frequency of trading in, and therefore exercised de facto control over, his customers’ accounts. Hananel’s short term trading in the customers’ accounts was excessive and unsuitable given the customers’ investment profiles, generating significant losses and trading costs in the form of commissions, markups and markdowns. In total, the customers, some of whom were senior citizens, paid commissions and trading costs of $1,473,118.00 and incurred losses of $2,103,176. The findings also stated that Hananel exercised discretionary trading authority in customer accounts without having obtained prior written authorization from the customers or approval from his member firm to treat the accounts as discretionary.”
For a copy of the FINRA sanction, click here.
In addition, Scott Hananel has been the subject of seven customer complaints, including three that remain pending, including the following:
- February 2021 — “Time frame: unspecified. Claimants allege unsuitable investments.” The customer dispute is pending.
- January 2021 — “Time frame: Unspecified. Claimant alleges breach of contract, breach of fiduciary duty, and unsuitable investment recommendations.” The customer dispute is pending.
- December 2020 — “Time frame: August 2019 to August 2020. Unsuitable investments, unauthorized trading, and churning.” Damages of $50,000 are requested, and the customer dispute is pending.
- December 2020 — “Time frame: August 2019 to August 2020. Unsuitable investments, unauthorized trading, and churning.” The customer dispute was settled for $67,500.
- March 2016 — “TIME FRAME: MARCH 2010 – NOVEMBER 2015. CLAIMANT ALLEGES UNAUTHORIZED TRADING, OVER CONCENTRATION IN UNSUITABLE INVESTMENTS, UNSUITABLE USE OF MARGIN, AND BREACH OF FIDUCIARY DUTY.” The customer dispute was settled for $46,500.
- February 2009 — “CUSTOMERS, THROUGH COUNSEL, ALLEGE THAT MR. HANANEL, FROM FEBRUARY 2007 THROUGH DECEMBER 2008, MADE VARIOUS MISREPRESENTATIONS TO CLAIMANTS, UPON WHICH THEY RELIED, RESULTING IN SIGNIFICANT DAMAGES.” The customer dispute was settled for $150,000.
- July 2002 — “UNAUTHORIZED TRADING; SUITABILITY OF INVESTMENTS.” The customer dispute was settled for $52,000.
For a copy of Scott Hananel’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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