According to publicly available information, former Hilltop Securities Inc. (Hilltop) broker Dennis P. Ayre (CRD# 5365176) has been named or otherwise involved in five customer disputes, all of which were filed in early 2020. In aggregate, these customer complaints allege damages of nearly $10 million, and generally concern allegations of unsuitability and excessive concentration, including “certain stocks and bonds of energy companies, as well as Sears common stock.”

In addition, with regard to two of the customer disputes, allegations have been raised that Mr. Ayre, in dereliction of firm compliance and in violation of FINRA rules, purportedly sent emails “through a private email domain that personally issued a put option to the [clients] to guarantee a return on a portfolio position.” As of this writing, one customer dispute has settled and four remain pending.

A previously registered broker, Mr. Ayre began his career in the securities industry in 2008 and was previously affiliated with several brokerage firms including First Republic, Wells Fargo Advisors, Merrill Lynch, and Oppenheimer. Most recently, from August 2019 through July 2020, Mr. Ayre was employed by Hilltop in Beverly Hills, California.

When a broker recommends an oil and gas investment to a client, the financial advisor should seek to ensure that the investor is aware of the volatility associated with the oil and gas sector. Further, the financial advisor has a duty and legal obligation to determine if the investment is suitable. Suitability of investments based on a customer’s risk profile, investment objectives, and other factors is a critical requirement of brokers providing investment advice. It is mandated by FINRA Rule 2111 (NASD Rule 2310).

In instances where an investor’s account becomes overconcentrated in oil and gas investments, or if a broker fails to disclose the risks associated with such an investment or investment strategy, then the broker and his or her firm may be held liable for losses suffered. In particular, with regard to investments that display considerable historical pricing volatility—such as energy investments in the oil and gas sector—a broker must ensure that a customer is aware of the potential for extreme price swings due to commodity volatility.

In instances when a customer’s account becomes overconcentrated in oil and gas, then the broker and his or her firm may be held liable for losses suffered. Broker-dealers have a duty to ensure that their registered representatives are adequately supervised. And brokerage firms must also take reasonable steps to ensure that their financial advisors follow all applicable securities rules and regulations. When a brokerage firm fails to adequately supervise its brokers, they may be held liable for losses suffered by investors.

The attorneys at Giarrusso Law Group LLC have extensive experience in handling claims on behalf of investors including claims related to unsuitability and overconcentration due to a negligent or defective investment program. Investors may contact our office by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation to evaluate any potential claims.