• March 25, 2019
• Hilltop Securities

Mark F. Augusta is a Financial Advisor at Hilltop Securities, Inc. in Del Mar, California. Mark Augusta has been in the securities industry since 1986 and previously worked at Baraban Securities, Inc. Miller & Schroeder Financial, Inc., Piper Jaffray & Co., Stone & Youngberg, LLC and Wedbush Securities, Inc.

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), Mark Augusta has twenty-one (21) customer complaint disclosures  on his CRD, alleging various sales practice violations. Among the customer complait disclosures include the following:

• May 2020—”UNSUITABLE PURCHASE OF THE PUERTO RICO MUNICIPAL BONDS IN DECEMBER 2014. THE COMPLAINT INCLUDES CLAIM FOR BREACH OF FIDUCIARY DUTY, BREACH OF WRITTEN AND ORAL CONTRACT, CONSTRUCTIVE FRAUD, FRAUD BY MISREPRESENTATION AND OMISSION.” Alleged damages are $50,000 and the matter remains pending.
• February 2019—”The claimant alleges that unauthorized and unsuitable investments were made by the financial advisor in June 2014.” The matter settled for $75,000.
• August 2018—”Unsuitable investments, breach of fiduciary duty, misrepresentations/omissions, negligence and violations of California securities laws.” The matter settled for $75,000.
• July 2018—”Claimants allege employing firms failed to supervise representative, misrepresentation by omission with respect to the disclosure of representative’s regulatory and disciplinary history, unsuitable recommendations, and financial abuse of an elder.” The matter settled for $87,500.
• March 2018—”Breach of Fiduciary Duty, Constructive Fraud, Fraud by Material Misrepresentations/Omissions, Breach of Written Contract, Elder Financial Abuse.” The matter settled for $73,900.
• October 2016—” Customer alleges poor recommendation with respect to the purchase of a swap rate linked certificate of deposit. Correspondence was subsequently received on June 9, 2017 with an additional suitability claim against Hilltop Securities Inc. specific to a hold recommendation alleged by the claimant.” The matter settled for $25,000.
• January 2016—”Customer alleges the purchase of ten Chino Hills CA 2.625% due 09/01/2024 bonds in October 2015 was unauthorized.” The matter settled for $150.
• May 2015—”ON BEHALF OF THE CLIENT, CPA WITH WRITTEN AUTHORIZATION CLAIMS THE CLIENT’S INVESTMENTS WERE UNSUITABLE FOR THEIR AGE AND STATED INVESTMENT OBJECTIVES.” An arbitration Panel found that “Mr. Augusta and his prior Firm had engaged in improper conduct, subjected the Claimant to elder abuse and permitted unauthorized trading in the Claimant’s account.” The Panel awarded $1,797,054 in damages, including attorney’s fees, disgorgement of commissions and interest.
• November 2001—”CLAIMANTS ALLEGE FRAUD, MISREPRESENTATION, AND BREACH OF FIDUCIARY DUTY WITH NUMEROUS PURCHASES OF MUNICIPAL BOND ISSUES…” The alleged damages were $3,000,000. Mark Augusta declared bankruptcy and the claims were discharged.
• April 2001—”ALLEGATIONS OF NEGLIGENCE, BREACH OF FIDUCIARY RESPONSIBILITY, FAILURE TO SUPERVISE AND FRAUD IN REGARD TO THE SOLLICITATION OF HIGH YIELD BONDS…” The alleged damages were $229,256. Mark Augusta declared bankruptcy and the claims were discharged.
• April 2001—”ALLEGATIONS OF NEGLIGENT MISREPRESENTATION, UNSUITABILITY, FRAUD, DECEIT, OMISSION OF FACT, BREACH OF FIDUCIARY DUTY IN REGARD TO THE SALE OF MUNICIPAL… AND CORPORATE BONDS…” The alleged damages were $514,845. Mark Augusta declared bankruptcy and the claims were discharged.
• December 2000—”MISREPRESENTATION OF UNRATED BONDS AS SAFE INVESTMENTS. FRAUD IN REGARD TO THE MISTATEMENT OF PRICE OF UNRATED BONDS ON THE MONTHLY STATEMENT. NEGLIGENCE IN REGARD TO RECOMMENDING HIGH YIELD BONDS WHICH WERE UNSUITABLE FOR ELDERLY CLIENTS RISK ADVERSE INDIVIDUALS.” The alleged damages were $500,000. Mark Augusta declared bankruptcy and the claims were discharged.
• July 2000 –”CLIENT ALLEGED THAT BROKER MISLED THEM REGARDING THE RISK, AND THE AFFILIATION OF THE HERITAGE FACILITIES. THE CLIENT ALSO ALLEGES BREACH OF FIDUCIARY DUTY, SUITABILITY REGARDING THE SOLICITATION OF HERITAGE BONDS.” Claimant was awarded $41,250.
• June 2000—”CLIENT PURCHASED HIGH YIELD MUNICIPAL AND CORPORATE BONDS FROM THE BROKER THAT THE CUSTOMER CLAIMED WERE UNSUITABLE FOR AN ELDERLY INDIVIDUAL, BASED ON AGE, TAX BRACKET, RISK TOLERANCE AND INVESTMENT OBJECTIVES.” Claimant was awarded $833,125, including attorneys’ fees and exemplary damages.

For a copy of Mark Augusta’s CRD, click https://brokercheck.finra.org/individual/summary/1333913#disclosuresSection

Unauthorized trading is a prohibited sales practice in the brokerage industry. Financial Advisors are required to obtain authorization from the client to purchase and sell securities prior to making a transaction. This requirement also extends to the date and price at which the transactions is made. In other words, Financial Advisors must discuss and obtain prior approval of every aspect of a transaction before it is made. If a transaction is unauthorized, the client may be entitled to rescind the trade and be placed back in the same position he or she was in prior to the transaction.

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Part of the suitability analysis requires that the trading activity be quantitatively suitable. Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio,and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at mwolper@wolperlawfirm.com.