The White Law Group reviews the regulatory history of Hightower Securities LLC.   

Hightower Securities LLC (CRD#: 116681/SEC#: 8-53560), based in Chicago, Illinois, has been a FINRA member since 2002. FINRA is the self-regulator who oversees brokers and brokerage firms.  The firm is a full-service broker dealer with close to 565 registered representatives who operate from 69 branch offices. 

 Broker-dealers may face various regulatory actions from FINRA and the Securities and Exchange Commission, including censures, fines, suspensions, and restitution. Such regulatory actions can have severe consequences, impacting the reputation and profile of the broker-dealer.   

This review focuses on publicly available information concerning Hightower Securities, its securities sales practices, and its regulatory history with FINRA, which serves as the self-regulatory body overseeing brokers and brokerage firms.   To review Hightower Securities full CRD, you can visit FINRA BrokerCheck.    

FINRA Fines Hightower for Improper Alternative Investment Sales 

According to public documents posted on June 30, 2023, Hightower agreed to FINRA’s sanctions involving alternative investment sales. FINRA censured and fined Hightower Securities $100,000 and ordered resitution for certain customers who purchased GPB Capital’s private placements and LJM funds. 

Hightower Securities allegedly negligently failed to inform 16 investors between May 4, 2018, and June 29, 2018, about the issuer’s failure to timely make required filings with the Securities and Exchange Commission. These filings included audited financial statements and were related to GPB Capital Holdings, LLC (GPB Capital). Hightower Securities reportedly violated FINRA Rule 2010. 

Hightower Securities allegedly failed to reasonably supervise certain representatives’ recommendations of the LJM Preservation & Growth Fund (LJM), an alternative mutual fund, between March 18, 2016, and February 8, 2018. The firm allowed the sale of LJM on its platform without implementing written supervisory procedures that required conducting due diligence on alternative mutual funds. 

These procedures are needed to ensure that the firm and its representatives possessed a sufficient understanding of the unique risks and features of the product. This includes the fact that the fund pursued a risky strategy involving the purchase of uncovered options. Additionally, Hightower Securities purportedly lacked a reasonable supervisory system for reviewing its representatives’ recommendations regarding LJM. 

Hightower Securities’ representatives reportedly sold $190,000 worth of LJM to three customers. During an extreme volatility event in February 2018, the value of LJM dropped by 80%. As a result, the fund was liquidated and closed, causing significant financial losses for those customers. Consequently, Hightower Securities violated FINRA Rules 3110 and 2010. 

In addition to the censure and $100,000 fine, FINRA ordered Hightower pay a partial restitution of $133,600, plus interest to certain customers who purchased GPB Capital and restitution of $119,577.40 plus interest to two customers who purchased LJM. 

FINRA Arbitration 

In addition to regulatory actions, FINRA BrokerCheck may disclose arbitration awards related to customer disputes. These awards typically reveal the outcomes of arbitration proceedings, potentially resulting in financial compensation for affected customers. If a broker or firm has multiple arbitration awards against them, it may indicate a pattern of unresolved customer complaints or misconduct. 

FINRA Panel Orders Hightower to Refund GPB Purchases  

According to FINRA Award 19-03721, a FINRA arbitration panel ordered Hightower Securities to fully refund its customer’s purchases of GPB Automotive Portfolio LP and GBP Waste Management LP, after Hightower Securities recommended the purchases. The FINRA arbitration panel reportedly found that Hightower Securities failed in its obligations to conduct adequate due diligence regarding GPB Capital and its affiliates. 

Hightower Securities Broker Misconduct and Customer Complaints        

There have been several cases of registered representatives employed by Hightower Securities who were allegedly involved in broker misconduct and fraudulent activities.  Broker dealers are required to supervise their employees. If they fail to do so they may be held liable through a FINRA arbitration claim.   

In 2018, the SEC filed charges against a Hightower broker in Wayne, Pennsylvania for insider trading. The charges involved trading in advance of the public announcement that Airgas, Inc. had entered into a definitive agreement to be acquired by Air Liquide, S.A. for approximately $10.3 billion, or $143 per share. In October and November of 2015, the broker allegedly misappropriated material nonpublic information about the proposed acquisition during the time of the merger negotiations. He was subsequently barred from the securities industry.

Failure to Supervise   

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.   

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.   

If your broker has defrauded you, you may be able to file a FINRA claim against your brokerage firm. FINRA arbitration can be a complex and technical process, and having an experienced attorney who is knowledgeable about securities law can greatly increase your chances of success.                

Potential Lawsuits to Recover Investment Losses     

If you have any questions about investments you made with Hightower Securities or if you believe that you have been the victim of securities fraud, The White Law Group may be able to help.  To contact the firm, please call 888-637-5510          

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.                

Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.                 

With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions attempt to recover their investment losses.                 

Although our offices are in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. For more information on The White Law Group, please visit https://whitesecuritieslaw.com.