Crown Capital Securities: Broker Misconduct, Complaints

Crown Capital Securities LP – Broker Misconduct and Regulatory Review

The White Law Group reviews the regulatory history of Crown Capital Securities LP, a full-service broker-dealer and registered investment advisor.

Crown Capital Securities LP (CRD#: 6312 | SEC#: 801-57663, 8-17264), headquartered in Orange, California, has been a FINRA member since 1972. According to its FINRA BrokerCheck report, the firm has 11 disclosure events, including 8 regulatory events and 3 arbitrations.

LPL Financial Acquires Crown Capital’s Wealth Management Business

On May 8, 2024, LPL Financial LLC officially completed its acquisition of the wealth management business of Crown Capital Securities. Approximately $1.3 billion of brokerage and advisory assets from 125 advisors have been onboarded to LPL. The remaining $3.7 billion in assets is expected to follow in the coming months. This strategic move is part of LPL’s broader effort to expand its independent advisor platform.

Regulatory Actions Involving Crown Capital Securities

Failure to Supervise – Excessive Charges

June 4, 2024 – FINRA sanctioned Crown Capital for failure to properly supervise nearly 9,000 direct business transactions from 2014–2019. This failure allegedly led to excessive sales charges totaling $116,390.58 for 54 customers. Crown Capital agreed to a $50,000 fine, censure, and full restitution plus interest.

March 2022 – Unregistered Compensation Violations

FINRA fined Crown Capital $75,000 and censured the firm for paying approximately $19.3 million in commissions to unregistered entities between 2017 and 2021. The firm was required to implement new compliance measures and certify future commission structures.

June 2021 – SEC Sanctions for Fiduciary Violations

The SEC charged Crown Capital with breaching fiduciary duties related to mutual fund share class selection and undisclosed revenue sharing arrangements. The firm paid nearly $1.6 million, including disgorgement, interest, and penalties.

June 2019 – Mutual Fund Switches and Supervision Failures

FINRA censured and fined Crown Capital $75,000 for failing to monitor short-term switches of Class A mutual funds. The firm paid $395,000 in restitution to customers harmed by unsuitable mutual fund switching activity.

Crown Capital Broker Misconduct and Customer Complaints

Several former Crown Capital Securities brokers have faced serious misconduct allegations and regulatory sanctions:

April 2024 – Broker Suspended for Discretionary Trading and Outside Business Activity

A broker in Santa Ana, CA, was suspended for exercising unauthorized discretionary authority and engaging in unapproved outside business activities, violating the firm’s written supervisory procedures.

November 2022 – Hugh O. Barndollar III “Sold Away” from Crown Capital

Hugh Barndollar (CRD#: 3027317) was suspended for two years and fined $10,000 after allegedly participating in 28 unapproved private securities transactions totaling over $1.4 million. He reportedly has 11 customer complaints.

February 2020 – Martin David Batstone Barred for Fund Conversion

Martin Batstone was barred by FINRA for the conversion of customer funds in violation of Rules 2150 and 2010. He has six customer complaints alleging unsuitable investment recommendations and related misconduct.

January 2016 – Eric Kuchel Barred for Failing to Cooperate with FINRA

Eric Kuchel (CRD# 4118500) was barred from the industry for failing to appear for FINRA testimony during a mutual fund transaction investigation. Kuchel reportedly has five customer complaints, including allegations of unauthorized trading and negligence.

Additional Brokers with Complaints

• Lanny Howarter (CRD# 813591): At least 6 customer complaints, including pending claims involving unsuitable alternative investments totaling over $1 million.

• Dennis Haywood (CRD# 5850275): Reportedly 10+ complaints related to non-traded REITs and BDCs, with some claims over $300,000.

• Russ Fieger: Facing a $325,000 pending complaint for unsuitable investments and misrepresentation.

Broker-Dealer Supervision Responsibilities

Brokerage firms like Crown Capital Securities have a legal obligation to supervise their financial professionals. Firms that fail to properly monitor their employees may be held liable for investor losses due to negligent supervision.

When brokers engage in activities such as unsuitable recommendations, selling away, or unauthorized trading, their firms can be held financially responsible through FINRA arbitration.

Class Action vs. Individual FINRA Arbitration Lawsuit

If you suffered significant investment losses (typically over $100,000), an individual FINRA arbitration claim is likely a more effective recovery option than joining a class action lawsuit. Class actions are more suitable for investors with small-dollar losses who share similar claims.

Free Consultation with Securities Attorneys

If you have concerns about investments made with Crown Capital Securities, the experienced securities attorneys at The White Law Group may be able to help.

Call 888-637-5510 for a free consultation.

The White Law Group is a national securities fraud and investor protection law firm with offices in Chicago and Seattle. The firm has handled over 800 FINRA arbitration cases and represents clients in claims involving stock fraud, broker misconduct, REIT losses, and alternative investments.

Visit: https://www.whitesecuritieslaw.com

FAQs about Crown Capital Securities

1. What kind of regulatory actions has Crown Capital Securities faced?

Crown Capital Securities has been subject to numerous regulatory actions by FINRA and the SEC, including fines for supervisory failures, unauthorized commissions, and fiduciary breaches. The firm has paid millions in restitution and penalties.

2. Are there Crown Capital brokers with a history of misconduct?

Yes. Brokers such as Hugh Barndollar, Martin Batstone, Eric Kuchel, Lanny Howarter, and Dennis Haywood have faced multiple complaints, suspensions, and even industry bars for alleged misconduct, including unauthorized trading and unsuitable investment recommendations.

3. Can I recover investment losses from Crown Capital through FINRA arbitration?

Yes. If you were a victim of unsuitable investments, fraud, or negligent supervision by a Crown Capital Securities broker, you may be eligible to recover losses through FINRA arbitration. Consult a securities attorney for a case evaluation.