Donald Hancock Sanctioned over GWG L Bond Sales
Donald Hancock (CRD# 828811), a broker registered with Moloney Securities, failed to exercise reasonable diligence in the sale of GWG L Bonds, according to a recent sanction. MDF Law is investigating the Manchester, Missouri-based financial professional for similar conduct. Current or former clients with concerns about their own investments are encouraged to contact us for a free consultation.
More information about the recent charges involving Mr. Hancock follows below. This post is based on a December 4, 2024 review of his BrokerCheck profile, a Financial Industry Regulatory Authority record.
SEC Order: Moloney Securities Sold Unsuitable GWG L Bonds
On September 27, 2024, the Securities and Exchange Commission announced administrative proceedings against Mr. Hancock. According to a disclosure on his BrokerCheck report, the proceedings named several other respondents associated with Moloney Securities. Mr. Hancock is the CEO of that firm, as an SEC order reflects.
The proceedings concerned the recommendations of L Bonds issued by GWG Holdings, offered between 2020 and 2022. As the order noted, these were highly risky, speculative investments. Among other things, they included the risk that an investor might lose their entire investment. The issuer, GWG, disclosed that the products were “only suitable for investors with substantial financial resources and no need for liquidity.” It also disclosed that it would use a portion of proceeds to repay existing investors. Then, in 2021, it disclosed factors that “raised substantial doubt regarding its ability to continue as a going concern.”
Don Hancock Allegedly Violated Regulation Best Interest
Despite these disclosures, Moloney Securities allegedly “failed to exercised reasonable diligence, care, and skill” to understand GWG L Bonds’ risks, rewards, and costs. The firm allegedly recommended these products to investors without a reasonable basis to believe they were suitable. As alleged, the firm also failed to establish policies and procedures to identify, disclose, mitigate, or eliminate conflicts of interest arising from the recommendations. Specifically, the SEC noted that the bonds were “created” by the firm CEO, Mr. Hancock, and that other employees had “personal ownership interests of GWG securities.”
FINRA concluded from the above and other alleged facts that the respondents failed to comply with Regulation Best Interest. Under this vital securities industry rule, brokers, advisers, and firms must take various steps to ensure that recommendations are in a customer’s best interests. The SEC specifically noted that during the period in question, Mr. Hancock “was responsible for the firm’s day-to-day operations and its sales of L Bonds to retail customers.” As such, it alleged, he caused the firm’s failures to comply with Regulation Best Interest.
In a negotiated settlement with the SEC, Mr. Hancock agreed to pay a monetary fine of $50,000. He also agreed to pay disgorgement of $7,331 and another monetary penalty of $1,010.
Pending Dispute Alleges Unsuitable Bond Sale
On September 24, 2024, an investor filed a dispute alleging that Mr. Hancock engaged in negligence and sold an unsuitable corporate bond. The dispute, which is still pending, seeks $359,325.61 in alleged damages. “I refute the allegations of the claims,” Mr. Hancock wrote in a “Broker Statement” appended to the claim’s disclosure.
FINRA: Moloney Broker Based in Manchester, Missouri
Mr. Hancock launched his career as a broker in 1976, according to his BrokerCheck profile. That year, he registered with R. Rowland & Company. He worked at a number of firms over the subsequent decades, including A.G. Edwards & Sons, D.R. Hancock & Company, and Hancock Securities Group. He registered with Moloney Securities in 2010, and is based at its Manchester, Missouri office today. With 48 years of experience as a broker, he has completed 14 industry exams, including the Series 55 and the Series 65.
GWG L Bond Losses? MDF Law Has Your Back
Did you suffer losses investing in GWG L Bonds or other risky products recommended by Donald Hancock or Moloney Securities? If so, you may be entitled to collect a recovery. The seasoned broker fraud lawyers at MDF Law have proven experience defending the rights of investors. We take cases on contingency, meaning our clients only pay a fee if they successfully recover investment losses. Call 800-767-8040 to discuss your situation for free today.