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Financial Advisor Hugh Barndollar III Fined & Suspended By FINRA

Hugh Barndollar III (CRD#: 3027317) is a previously registered Broker and an Investment Advisor.

Broker’s Background

He entered the securities industry in 1998 and previously worked for Crown Capital Securities, L.P.; Newport Coast Securities, Inc.; J.P. Turner & Company, LLC; Calton & Associates, Inc.; Brookstreet Securities Corporation; and Dean Witter Reynolds, 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 November 2022, FINRA sanctioned Hugh Barndollar III with civil and administrative penalties/fines of $10,000 and a suspension from all capacities for two years, beginning December 5, 2022 and ending December 4, 2024. The FINRA sanction states, “Without admitting or denying the findings, Barndollar consented to the sanctions and to the entry of findings that he participated in unapproved private securities transactions totaling $1,418,108. The findings stated that in addition to serving as a registered representative of his member firm, Barndollar also provided asset management services as an investment advisor representative. Barndollar’s firm placed him on heightened supervision due to customer arbitrations that were initiated involving alleged sales practice violations. The heightened supervision plan prohibited Barndollar from selling alternative investments through the firm. Barndollar, however, participated in sales of $742,058 in alternative investments after the heightened supervision plan began through a registered investment advisory firm. Most of the investors were firm customers. Barndollar participated in the transactions by recommending and/or facilitating the investments, including by meeting with the investors to discuss the investments and assisting them with documentation. Barndollar’s advisory clients paid advisory fees to the advisory firm on the assets held in their advisory accounts, including the alternative investments that Barndollar recommended and/or facilitated. Barndollar disclosed his advisory firm as an OBA to his firm, stating that he managed accounts on a fee-based platform that involved third-party money managers. While the firm approved of this OBA, Barndollar did not provide it with prior written notice of his participation in the sale of alternative investments through the advisory firm or obtain the firm’s written approval to sell those investments. Furthermore, Barndollar falsely certified on multiple firm annual compliance questionnaires that he had not engaged in any private securities transactions that had not been previously disclosed and approved by the firm.”

For a copy of the FINRA sanction, click here.

In addition, Hugh Barndollar III has been the subject of ten customer complaints, including one that remains pending, including the following:

  • April 2021 — “Customers allege lack of suitability and failure to conduct proper due diligence in regards to the purchase of alternative investments.” The customer dispute was settled for $35,000
  • August 2020 — “CUSTOMER ALLEGES LACK OF SUITABILITY, NEGLIGENCE, MISREPRESENTATIONS AND OMISSIONS OF MATERIAL FACTS IN REGARDS TO TRANSACTIONS IN NONTRADITIONAL, ALTERNATIVE AND/OR NON-TRADED REIT INVESTMENTS.” The customer dispute was settled for $25,000.
  • August 2020 — “Customer alleges lack of suitability, negligence and misrepresentations and omissions of material facts in regards to transactions in alternative and variable annuity investments.” The customer dispute is pending.
  • August 2020 — “Customer alleges lack of suitability, negligence and misrepresentations and omissions of material facts in regards to transactions in alternative and variable annuity investments.” The customer dispute was settled for $82,500.
  • July 2020 — “Customer alleges lack of adequate due diligence, negligence and misrepresentations and omissions of material facts in regards to transactions in a non-traded REIT.” The customer dispute was settled for $36,000.
  • June 2020 — “The customer alleges lack of due proper due diligence, breach of fiduciary duty and suitability obligations as it relates to the purchase of illiquid alternative investments.” The customer dispute was settled for $45,000.
  • May 2020 — “Customers allege they were sold alternative investments that underperformed.” The customer dispute was settled for $160,000.
  • April 2020 — “The claimant alleges lack of suitability, breach of contract and lack of proper due diligence for two alternative investments purchased April 2018.” The customer dispute was settled for $37,500.
  • July 2019 — “CLAIMANT ALLEGES NEGLIGENCE IN THE HANDLING OF THEIR ACCOUNT AND THE RECOMMENDATION OF FINANCIAL INVESTMENTS; BREACH OF FIDUCIARY DUTY AND NEGLIGENT SUPERVISION BY CROWN CAPITAL IN ALLOWING IT’S BROKERS TO CONDUCT INADEQUATE DUE DILIGENCE.” The customer dispute was settled for $30,000.
  • May 2010 — “ALLEGED UNSUITABILITY, ALLEGED NEGLIGENCE, ALLEGED FRAUD, ALLEGED MISREPRESENTATION AND ALLEGED BREACH OF FIDUCIARY DUTY.” The customer dispute was settled for $47,500.

For a copy of Hugh Barndollar’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

The Financial Industry Regulatory Authority (FINRA) strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.

The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.

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 mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]