The White Law Group reviews the regulatory history of Hornor, Townsend & Kent LLC.   

Hornor, Townsend & Kent LLC (CRD#: 4031/SEC#: 801-56151,8-14715), headquartered in Horsham, Pennsylvania, is a dual registered national financial advisory firm with $136 million in revenue in 2021. It is one of the fifty largest independent brokerage firms in the US, according to data from Investment News. According to FINRA, the firm reportedly has 17 disclosures on its broker record including 11 regulatory actions and 6 arbitrations.    

The firm operates under the names Hornor, Townsend & Kent and Penn Mutual Equity Services, according to their CRD. 

Regulatory actions taken against a broker-dealer may include censures, fines, suspensions and restitution, among others. They can have serious consequences for a broker-dealer’s profile and reputation.    

Arbitrations on a broker-dealers CRD (Central Registration Depository) refer to the resolution of disputes between a broker-dealer and a client or between broker-dealers themselves through the FINRA arbitration process. When a client or another broker-dealer files a complaint against a broker-dealer, the complaint may be resolved through arbitration, which is a process where an independent third party (the arbitrator) hears both sides of the dispute and makes a binding decision.    

Hornor, Townsend & Kent Broker Misconduct and Customer Complaints    

All broker-dealers have a responsibility to adequately supervise their 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.     

There have been several cases of registered representatives employed by Hornor, Townsend & Kent who were allegedly involved in broker misconduct and fraudulent activities.  

In October 2019, FINRA reportedly suspended and fined Clay Erickson for alleged unauthorized transactions, totaling $5,317,233.32, in his customers’ variable annuity accounts. According to FINRA, Erickson purportedly transferred all the funds held by 57 customers across 86 variable annuity contracts to a money market sub-account, anticipating an imminent market downturn, according to FINRA. 

To transfer these funds, Erickson purportedly failed to obtain authorization from the customers. Erickson reportedly did not possess discretionary authority over his customers’ accounts. 

According to his FINRA BrokerCheck report, Erickson was reportedly affiliated with Hornor, Townsend & Kent in Salt Lake City, Utah from 2011 until 2016. He has six customer complaints on his broker record. 

FINRA Sanctions Hornor, Townsend & Kent    

Hornor, Townsend & Kent has also reportedly had issues with regulators, with 11 actions listed on their broker report, including the following:  

In March 2023, FINRA sanctioned Hornor, Townsend & Kent for supervisory failures. From July 2013 through March 2016, the firm allegedly failed to reasonably supervise a registered representative who sold securities associated with a disclosed, but unapproved, outside business activity, an alleged Ponzi scheme, Future Income Payments (FIP). Between July 2013 and March 2016, the representative voluntarily resigned from Hornor, Townsend, and allegedly sold over $7 million in FIP securities to 39 investors, including 16 firm customers. 

According to FINRA, the firm failed to timely review the request in July 2013 to engage in an outside business activity involving the sale of Future Income Payments. When the firm decided approximately seven months later to deny the request, it failed to communicate its decision to the rep. In his notice to the firm, the rep reportedly stated he intended to begin engaging in the sales of this product by July 20, 2013. Despite being on notice of this intention, the firm failed to reasonably investigate whether he had commenced selling the security. By virtue of the foregoing, the firm violated NASD Rule 3010 and FINRA Rules 3110 and 2010. FINRA censured and fined Hornor, Townsend & Kent $180,000.  

In November 2017, Hornor Townsend & Kent was censured and fined $275,000 for supervisory issues. 

Hornor Townsend & Kent reportedly sold at least 15,815 VA contracts to its customers. Approximately 7,398 (46.7%) of these were L-share contracts. 

According to FINRA, the firm allegedly failed to implement a supervisory system and procedures reasonably designed to ensure the suitability or multi-share class Variable Annuity sales, including L-share contracts. 

FINRA Rule 3110 Supervision      

The FINRA supervision rule (FINRA Rule 3110) helps to ensure that firms have effective supervisory systems in place to protect investors and maintain the integrity of the securities markets.    

FINRA Rule 3110 is designed to protect investors by requiring firms to establish and maintain a supervisory system that is reasonably designed to achieve compliance with applicable securities laws, regulations, and FINRA rules. This helps to ensure that the firm and its associated persons conduct business in an ethical and compliant manner, reducing the risk of harm to investors.    

The rule requires firms to designate one or more qualified individuals to be responsible for supervising the activities of the firm and its associated persons. These individuals are responsible for ensuring that the firm’s supervisory procedures are effective in detecting and preventing violations of securities laws and regulations.    

Additionally, the rule requires firms to establish written supervisory procedures that are reasonably designed to achieve compliance with applicable securities laws, regulations, and FINRA rules. These procedures should cover all aspects of the firm’s business, including customer interactions, trading activities, and record-keeping requirements.    

Firms must also review and monitor customer account activity to detect and prevent potential violations, and conduct periodic inspections of the firm’s offices and other locations where business is conducted.    

Hiring a FINRA Attorney     

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 claim with FINRA to seek resolution through arbitration.  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.      

The FINRA attorneys at the White Law Group can help you with many aspects of the arbitration process including evaluating the merits of your claim and determining whether you have a strong case for arbitration.      

The White Law Group can assist you in drafting a statement of claim that accurately reflects the allegations of fraud and the damages you are seeking. They will also represent you at the arbitration hearing, present evidence and make arguments on your behalf. They can also negotiate a settlement on your behalf, which may be an option to consider before going to arbitration.      

Working with a FINRA attorney can help ensure that your interests are protected throughout the FINRA arbitration process, and that you have the best possible chance of achieving a favorable outcome.      

Keep in mind, FINRA arbitration is generally a faster and less expensive alternative to a traditional court proceeding.      

National Securities Attorneys – the White Law Group         

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.             

If you have concerns regarding investments you purchased through Hornor, Townsend & Kent and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.    

For more information on The White Law Group, visit whitesecuritieslaw.com.