Robert Hillard Suspended by FINRA for Alleged Unsuitable Recommendations

Robert Hillard (CRD #: 1005606), a broker registered with Arlington Securities, has been suspended by FINRA, according to his BrokerCheck record, accessed on January 7, 2025. If you have questions about his alleged conduct as a broker, keep reading.

FINRA Suspension

On December 11, 2024, Robert Hillard consented to the entry of findings that he allegedly recommended that 14 clients liquidate their lower-cost mutual funds to purchase more expensive variable annuities without a reasonable basis to believe these transactions were suitable.

A Letter of Acceptance, Waiver & Consent (AWC) alleged that some of the Class C share mutual funds that Robert Hillard had previously sold to his clients started converting to Class A shares in late 2018.

Some mutual funds automatically convert Class C shares into Class A shares after a holding period. Class A shares generally have front-end sales charges but lower ongoing fees than Class C shares, and these lower ongoing expenses also reduce the commissions received by the broker who sold the mutual fund.

The AWC alleged that the conversion of these clients’ mutual funds to Class A shares substantially decreased Robert Hillard’s personal income.

Between December 31, 2018, and October 28, 2019, Robert Hillard allegedly recommended that 14 clients liquidate a total of 63 mutual funds (including Class A and C shares) and use the proceeds to purchase a variable annuity. He allegedly recommended an investment-only variable annuity that charged additional fees that raised clients’ annual expenses.

The AWC alleged that Robert Hillard did not have a reasonable basis to believe these investors would benefit from the features of this variable annuity or that it would be suitable given the details of their investment profiles, including their age, net worth, and financial situation.

Robert Hillard’s recommendations allegedly caused the 14 clients to pay a collective $67,026.47 in additional annual fees.

Alleged Failure to Supervise

The AWC further alleged that Arlington Securities’ system of supervision and Written Supervisory Procedures (WSPs) were not reasonably designed to supervise the suitability of broker recommendations concerning mutual funds and variable annuities.

Arlington Securities’ WSPs allegedly failed to describe the process for reviewing the suitability of these recommendations, including red flags that a recommendation does not suit an investor’s profile. The firm allegedly also failed to describe the review process for the suitability of variable annuity purchases in relation to FINRA Rule 2330(b).

The AWC alleged that the firm failed to reasonably review Robert Hillard’s recommendations to liquidate mutual funds and purchase variable annuities, failed to identify the red flags associated with them and whether the clients would benefit from the features of these investments, and whether investors’ ongoing fees would increase.

The AWC concluded that these allegations constitute violations of FINRA Rules 2111, 2330(b), and 2010 on the part of Robert Hillard, and violations of FINRA Rules 2330(c), 2330(d), 3110, and 2010 on the part of Arlington Securities.

FINRA Rule 2111

FINRA Rule 2111 defines suitable investments as securities that fit an investor’s profile. These profiles contain information about investors’ investing experience, risk tolerance, and financial goals.

Investors who rely on brokers for recommendations may be able to recover their losses through FINRA arbitration.

FINRA Rule 2330

FINRA Rule 2330 requires brokers to have a reasonable basis to believe that their recommendation of a variable annuity purchase or exchange will be suitable for investors, and also requires the supervision and review of these recommendations by the firm.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

FINRA Rule 3110

FINRA Rule 3110 requires that firms establish systems of supervision over their employees in order to detect and prevent violations of securities regulations. Among other things, firms must appoint supervisors and ensure that they have adequate training or experience.

Sanctions

Robert Hillard consented to the following sanctions:

• Four-month suspension from associating with FINRA members
• $10,000 fine
• Joint and several restitution of $67,026.47, plus interest

His suspension began on January 6, 2025, and will end on May 5, 2025.

Arlington Securities consented to the following sanctions:

• Censure
• $50,000 fine
• Joint and several restitution of $67,026.47, plus interest
• Undertaking to remediate the supervisory issues alleged in the AWC

You can access the full AWC here.

Background Information

Robert Hillard has passed the following exams:

• Municipal Fund Securities Principal Examination – Series 51
• Introducing Broker/Dealer Financial Operations Principal Examination – Series 28
• Municipal Securities Principal Examination – Series 53
• General Securities Principal Examination – Series 24
• Operations Professional Examination – Series 99TO
• Municipal Securities Representative Examination – Series 52TO
• Securities Industry Essentials Examination – SIE
• General Securities Representative Examination – Series 7
• Uniform Securities Agent State Law Examination – Series 63

Robert Hillard is a registered broker in 18 states and a registered investment adviser in Missouri.

He has also worked for American Capital Equities (CRD#:13272) and First Affiliated Securities (CRD#:6871).

Kurta Law Can Help

If you worked with Robert Hillard and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm that exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.