National investment fraud lawyers KlaymanToskes is investigating on behalf of former and current customers of Morgan Hill in light of the Knoxville-based broker selling unsuitable GWG L Bonds. Hill is registered as a broker with Center Street Securities and Arete Wealth Management, and Hill is the CEO of wealth management firm Hill & Hill Financial, LLC.
Morgan Hill, who is a Center Street Securities broker and owner of Hill & Hill Financial, sold illiquid, risky L Bonds issued by GWG Holdings, Inc., which is a Company that filed for Chapter 11 bankruptcy protection in April 2022 after defaulting on L Bond interest and principal payments. GWG Holdings sold $1.6B of L Bonds to customers, and the firm along with its network of broker-dealers have been under SEC investigation in recent months for GWG L Bond sales.
Brokerage firms and its financial advisors must only recommend suitable investments to their customers. Unsuitable investment advice is an investment recommendation that is not consistent with an investor’s investment objectives, risk tolerance and investment time horizon. Per GWG’s 2020 prospectus, the L bonds were only suitable for a very particular investor. Specifically, the prospectus states that “L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment.” L bonds were sold to many retirees and elderly investors, many of whom were not willing or able to accept this high risk.
Regulation BI’s Best Interest Obligation requires brokerage like Center Street Securities and its associated persons like Morgan Hill when making a recommendation of any securities transaction to a retail customer, to act in the best interest of that retail customer at the time the recommendation is made. The recommendation must be made without placing the financial or other interest of the broker, dealer, or associated person ahead of the interest of the retail customer.
The Care Obligation in Regulation BI also requires a broker, dealer, or associated person to exercise reasonable diligence, care, and skill to have a reasonable basis to believe that their recommendation is in the best interest of the particular retail customer, based on that customer’s investment profile and the potential risks, rewards, and costs associated with the recommendation.
According to FINRA BrokerCheck, Morgan Hill is registered as a broker with Center Street Securities and Arete Wealth Management. He has been registered with Arete Wealth Management since April 2022. Hill has been registered with Center Street Securities since December 2014. Hill is also an investment adviser with Center Street Advisors, Inc. Morgan Hill is the owner and president of Hill & Hill Financial. He started the firm in 2001. According to his BrokerCheck, Hill sells fixed annuity products at Hill & Hill Financial. The firm has offices in Chattanooga, Knoxville, and Woodstock.
Former and current customers of Morgan Hill who purchased GWG L Bonds, and those with information relating to the handling of their accounts, are encouraged to contact Lawrence L. Klayman, Esq. at 1- 888-997-9956.
KlaymanToskes is a leading national securities law firm which practices exclusively in the field of securities arbitration and litigation on behalf of retail and institutional investors throughout the world in large and complex securities matters. The firm has recovered more than $230 million in FINRA arbitrations and over $350 million in other securities litigation matters for its clients. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.