The law firm of Oakes & Fosher is presently investigating the alleged misconduct of securities broker Mercer Hicks. Mercer Hicks is a North Carolina based securities broker. He has worked in the securities industry for forty-seven years. During his career, he has been registered with thirteen different securities firms.
His Registrations
- Reynolds Securities (1972-1974)
- J.C. Bradford & Co. (1974-1975)
- E.F. Hutton & Company (1975-1978)
- Wheat First Securities (1978-1984)
- Carolina Securities Corporation (1984-1988)
- Thomson McKinnon Securities (1988-1989)
- NCNB Securities (1989-1991)
- Advantage Capital Corporation (1991-1993)
- Robert Thomas Securities (1993-1997)
- American Investment Services (1997-2001)
- Cantella & Co. (2001-2009)
- Capital Investment Group (2009-2014)
- Southeast Investments (2014-Present)
The Allegations
- Mercer Hicks was officially sanctioned by FINRA in December 2019. The findings in this matter state that he made highly unsuitable investment recommendations to multiple customers. Hicks allegedly recommended highly speculative private investments to five elderly investors–three of whom were widows. These particular private investments were what are known as non-traded REITs, or real estate investment trusts, and non-traded BDCs, or business development companies. Mercer Hicks allegedly recommended that these customers liquidate their variable annuities to purchase these private products. Not only was this unsuitable and unnecessary based on the customers’ investment objectives, but it also led to the customers incurring excessively high withdrawal fees. These five customers purchased approximately $665,000 of these unsuitable REITs and BDCs on Mercer Hicks’ alleged recommendations. This provided Hicks with a total of $46,550 in commissions. As a result of these findings, Hicks was barred from acting as a securities broker in all fashions indefinitely and ordered to pay disgorgement to FINRA in the amount of $38,812.60.
What Does This Mean?
Non-traded REITs and BDCs are incredibly risky investments that are unsuitable for investors–especially those with more conservative objectives. Their business plans rely heavily on circumstance and luck and quite often result in predictable failure. Some less than scrupulous or negligent securities brokers fail to communicate how truly risky these products are when pitching them to investors. Either brokers purposefully misrepresent or omit the associated risks, or they fail to conduct the necessary due diligence required to determine if an investment is suitable. Regardless of the broker’s intent, being invested in these highly unsuitable products can cause serious financial detriment to investors.
Non-traded REITs and non-traded BDCs are also incredibly illiquid investments. Many securities brokers entice investors through the promise of consistent distributions. However, these distributions are in no way guaranteed and are entirely dependent upon the success of the investment. If the company’s success diminishes, the distributions might stop and investors might be forced to liquidate their shares. However, this is not always possible when investing in non-traded REITs or non-traded BDCs. These investment pools often have very short periods of operation that are often predetermined. Those managing these funds require the necessary capital to make it through their operations period into the liquidation phase. If these companies are not succeeding, then the money solicited through initial investments is all the more crucial. Because of this, liquidation is very difficult until such time that operations cease and the company has either become public or entered its liquidation phase. If an investor is forced to liquidate their held assets before that time, they may be forced to accept a buy out that is significantly less than what they are told the shares are presently valued at.
These products are also accompanied by excessively high up-front fees. Most of these are paid to the recommending broker as their commission. These commissions are incredibly high and work to greatly diminish the investor’s principal investment. Mercer Hicks allegedly received a whopping 7 percent commission from his investor’s principals every time he executed one of these private transactions on their behalf. These commissions are compounded with other upfront fees that greatly reduce the investor’s chances of actually seeing any investment returns.
Oakes & Fosher Can Help
Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages.
Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Mercer Hicks, please contact Oakes & Fosher for a free and private consultation. We work on a contingency basis, which means there are no fees charged unless we collect for you.
