The Securities Arbitration Law Firm of Klayman & Toskes, P.A. (www.nasd-law.com) announced today that it is investigating Allstate Financial Services (“Allstate”) and AXA Advisors (“AXA”) relating to the supervision of former Allstate and AXA broker Diego F. Hernandez, who allegedly misappropriated approximately $921,000 from 13 Colorado investors through a fraudulent offering of securities.
According to an Order Instituting Administrative and Cease-and-Desist Proceedings filed by the US Securities and Exchange Commission (“SEC”) on September 24, 2013, “between July 2011 and approximately April 2013, Hernandez, through Wealth Management, Wealth Financial, DFHR, and HD Mile High, willfully violated the antifraud provisions of the Securities Act and the Exchange Act by raising and misappropriating approximately $921,000 from 13 Colorado investors through a fraudulent offering of securities. Hernandez carried out his fraudulent offering by meeting with each investor and telling them that he, through his entities, would invest their money in corporate bonds or another “safe” investment that would pay a guaranteed, above-market annual interest rate. In reality, Hernandez, through Wealth Management, Wealth Financial, DFHR, and HD Mile High, willfully misappropriated investor funds for (1) personal expenses, (2) business expenses, and (3) to repay other investors.”
The SEC also said that “Hernandez falsely told investors that he, through his entities, would be investing their funds in corporate bonds. The account statements for Wealth Management and Wealth Financial, which were drafted by Hernandez and provided to some investors, also described the investment as a “corporate bond.” The account statements also falsely stated that there was a “market” for the “corporate bonds,” and that Wealth Management was a “fund.” Hernandez also told investors that he, through DFHR or Wealth Management, would be placing their money in another “safe” investment, such as mutual funds or annuities. Hernandez failed to disclose to investors that The Wealth Management Partners, Wealth Financial, DFHR Investments and HD Mile High Marketing would be the sole recipients of their funds, that their funds would be treated as a “loan” to these entities, that their funds would be used to pay the business and personal expenses of these entities, and that their funds would be used to repay other investors.”
From August 2005 to April 2012, Hernandez was registered with FINRA broker-dealer Allstate Financial Services. Thereafter, from April 2012 to February 2013, Hernandez was registered with another FINRA broker-dealer, AXA Advisors. Under FINRA Rules, these brokerage firms were obligated to properly supervise the activities of Hernandez during the time he was registered with the firms. Accordingly, Allstate and AXA may be liable for failing to supervise Hernandez’s activities while registered at the firms.
If you have information relating to this investigation, please contact Steven D. Toskes, Esquire or Jahan K. Manasseh, Esquire of Klayman & Toskes, P.A., at 888-997-9956.