Hornor, Townsend & Kent, LLC (“Hornor Townsend”) (CRD# 4031) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Hornor Townsend, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.
If you believe you have a claim against Hornor Townsend, you should strongly consider hiring an investment loss lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
Can I Sue Hornor, Townsend & Kent, LLC?
If you’ve lost money caused by Hornor Townsend and/or its employees’ misconduct then the answer is, YES, you can sue Hornor Townsend but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Hornor Townsend in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Hornor Townsend is to call Attorney Pearce at our office at 800-732-2889.
What is Hornor, Townsend & Kent, LLC?
Hornor Townsend (CRD# 4031) has been registered with the SEC and FINRA as a broker dealer since 1969. The company is controlled by the Penn Mutual Life Insurance Company and headquartered in Horsham, Pennsylvania with small branch offices located throughout the United States. Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 200 Hornor Townsend branch offices with over 450 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Hornor, Townsend & Kent, LLC Has Many Different Regulatory Problems
Hornor Townsend’s growth has not been without consequences. There have been approximately 10 Federal, state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) ) for a violation(s) of investment-related rules or regulations. In addition, there have been scores of customer complaints filed against Hornor Townsend for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
We have reported and written about these regulatory problems and customer complaints over many years. Hornor Townsend is a repeat offender: there are at least 9 FINRA reported disciplinary proceedings citing the firm with one form of supervisory lapses or another.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS HORNOR, TOWNSEND & KENT HAS FACED OVER THE YEARS*
Hornor Townsend has been repeatedly censured, warned, and fined over $1 million for its own misconduct and failure to supervise its army of financial advisors.* A few of the notable FINRA sanctions for its supervisory failures are below:
FINRA Sanctions Hornor Townsend For Variable Annuities Sales Abuse
FINRA investigated Hornor Townsend and found the broker-dealer failed to reasonably supervise representatives sale of multi-share class variable annuities, and failed to provide training to its representatives and principals on the sale and supervision of multi-share class variable annuities. Based on the foregoing, FINRA concluded Hornor Townsend violated NASD Rule 3010(a) and (b) and FINRA Rules 2330(d) and (e), 3110(a) and (b) and 2010. Further, FINRA concluded Hornor Townsend failed to adequately supervise representatives’ private securities transactions. Based on the foregoing, HTK violated NASD Rules 3010(a) and (b) and 3040 and FINRA Rules 3110(a) and (b) and 2010. As a result of the foregoing, FINRA imposed a censure and a fine of $275,000 on the broker-dealer.
FINRA Sanctions Hornor Townsend For Supervisory Lapses
During one of FINRA’s audits of Hornor Townsend it discovered that the broker-dealer failed to establish and maintain a supervisory system and establish, maintain and enforce written supervisory procedures that were reasonably designed to achieve compliance with the rules and regulations concerning its direct application transactions involving mutual funds. In addition, it found Hornor Townsend failed to prepare blotters as required by Rule 17a-3(a)(1) promulgated under the Securities Exchange Act of 1934 (“Exchange Act”). FINRA concluded that this conduct violated NASD Conduct Rules 3010 and 31 10, FINRA Rule 2010, MSRB Rules G-27 and G-8, and Exchange Act Rule 17a-3 and censured the firm and fined it $150,000.
FINRA Sanctions Hornor Townsend For Conflicted Mutual Fund Sales Recommendations
FINRA investigated Hornor Townsend and found violations of NASD Conduct Rule 2830(k), which prohibits member firms from favoring or disfavoring the sale or distribution of mutual fund shares on the basis of brokerage commissions received by the firm and prohibits member firms from recommending the purchase of mutual fund shares on the basis of brokerage commissions received or expected to be received by the firm from any source. FINRA concluded that this conduct violated NASD Rules 2830 and 2010 and censured and fined the broker-dealer $50,000.
FINRA Sanctions Hornor Townsend For Group Variable Annuity Contract Sales Abuses
FINRA conducted a firm-wide investigation and found that approximately 161 registered representatives of Hornor Townsend had sold group variable annuity contracts and earned commissions of approximately $3.5 million.
During the relevant period, Hornor Townsend had selling agreements with 24 insurance companies for the sale of insurance products and allowed its registered representatives to sell insurance products, including group variable annuity contracts, after disclosure of this practice to Hornor Townsend.
However, FINRA found that Hornor Townsend failed to establish and maintain a system to supervise the activities of each registered representative and associated person reasonably designed to achieve compliance with the applicable securities laws and regulations and NASD Rules related to the sale of group variable annuity contracts. Also, Hornor Townsend failed to establish and maintain written supervisory procedures related to the sale of group variable annuity contracts. In addition, Hornor Townsend failed to properly record group variable annuity contract transactions on its books and records.
FINRA concluded that all of the above constituted separate and distinct violations of NASD Conduct Rules 2110, 3010, 3040, 3110 and SEC Rule 17a-3 4 which it censured and fined the firm $125,000.
Conduct Rule 3010, FINRA Rule 3110, and FINRA Rule 2010, censured and ordered the brokerage firm to conduct the remediation and make restitution to those customers cheated out of sales charge waivers and charged higher expenses by being invested in the wrong share of mutual funds sold to them by Principal Securities financial advisors.
FINRA Sanctions Hornor Townsend For Mutual Fund Timing Sales Abuse
FINRA investigated Hornor Townsend and found the broker-dealer failed to establish and maintain a supervisory system and written procedures reasonably designed to detect and prevent late trading in mutual fund transactions and, as a result, violated NASD Rules 3010 and 2110. Late trading, as referred to herein, is the practice of accepting and entering orders to buy or sell mutual fund shares after 4:00 p.m. Eastern Time, the time as of which mutual funds typically calculate their net asset value (NAV), while providing a price for those orders based on the NAV already determined as of 4:00 p.m.
FINRA found these violations occurred because Hornor Townsend supervisory systems and procedures were deficient in several ways. For instance, HTK’s systems were not reasonably designed to prevent or restrict representatives from accepting and entering orders received from customers after 4:00 p.m. for execution at the current day’s NAV. Hornor Townsend procedures did not require verification of time of receipt of the order from the customer. The firm’s written procedures also failed to instruct representatives that late trading was prohibited and did not require supervisory review or approval of mutual fund orders submitted after 4:00 p.m.
FINRA also found that Hornor Townsend also failed to preserve certain mutual fund trading records for three years and failed to create records reflecting the time of receipt of mutual fund orders. As a result, FINRA concluded Hornor Townsend violated Section 17(a) of the Securities Exchange Act of 1934 (“the Exchange Act”), Rules 17a-3(a)(6) and 17a-4(b)(l) thereunder, and NASD Conduct Rules 3110(a) and 2110 and censured and fined the broker-dealer, $150,000.
FINRA Sanctions Hornor Townsend For Variable Life Insurance And Variable Annuity Sales Abuse
FINRA investigated and discovered that Hornor Townsend conducted national and branch office sales contests for its brokers and managers to promote the sale of selected variable life and variable annuity products. Several of those contests included only variable products offered by Hornor Townsend’s parent company, Penn Mutual Life Insurance Company (“Penn Mutual”). Moreover, in determining contest winners, sales of Penn Mutual variable life products were given exclusive or greater weight than Penn Mutual variable annuity products or they were given greater weight than variable products offered by other companies. Hornor Townsend offered or awarded various forms of non-cash compensation for the winners of six national contests, including weekend trips to New York City, New Orleans and Las Vegas, with a total value of over $200,000. As prizes for thirteen branch contests, the firm offered and awarded such items as golf trips, tickets to sporting events and other entertainment, dinners, high-definition television sets and other expensive electronic goods. The contests violated NASD rules because they favored the sale of particular products.
In the course of its investigation, FINRA also discovered that Hornor Townsend failed to maintain and preserve all e-mail communications as required by SEC Rule 17a-4. Specifically, Hornor Townsend failed to retain e-mail communications for its non-registered employees and for a number of registered persons, including its President and two other senior managers, with jobs that did not require customer contact. Three of those senior managers each approved at least some of the violative national sales contests.
Based on the foregoing, FINRA concluded Hornor Townsend failed to have a supervisory system and procedures that were reasonably designed to achieve compliance with the NASD’s non-cash compensation rule in violation of NASD conduct rules 2820, 3010, and 2110 for which it censured and fined the broker-dealer, $325,000.
*Above are only some of the regulatory disciplinary actions filed against Hornor Townsend by FINRA. There are at least 4 more SEC, FINRA, NASSA, and/or state securities regulator investigations and enforcement actions reported on BrokerCheck as regulatory disciplinary proceeding disclosures.
Hornor Townsend & Kent Customer Complaints
There have been hundreds of complaints filed against Hornor Townsend & Kent stockbrokers and investment advisors over the years. We have launched many investigations of current and former Hornor Townsend & Kent advisors:
If you have lost money investing with any of these Hornor Townsend & Kent advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call us at 800-732-2889.
Why Does Hornor, Townsend & Kent, LLC Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.
The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers.
Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.
These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.
Did Hornor, Townsend & Kent, LLC Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Hornor Townsend is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Hornor Townsend without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By Hornor, Townsend & Kent, LLC Today!
The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Hornor Townsend cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.