FINRA barred former Huntington Investment Company broker David Michael Miller and ordered he pay $800,000 in disgorgment and restitution to customers, alleging that he recommended unsuitable Unit Investment Trusts (UITs) without a reasonable basis for the recommendations, which caused his clients to lose money. FINRA also fined Miller an additional $15,000 to account for ill-gotten commissions, and for negligent misrepresentation, including omission of material facts.
OHO Disciplinary Proceeding #2013036874901
The investigation states that Miller's pattern of unsuitable recommendations impacted over 140 UIT purchases totaling over $5.3 million in 129 customer accounts, even affecting at least one customer who said she had no idea she was purchasing an unsecured investment with risk of loss. FINRA said Miller "never read a UIT prospectus before making his recommendations" and that Miller similarly did not understand key UIT features, such as maturity issues, risks, volatility, and leverage use associated with the UITs, which invested in closed-end funds and tax-exempt municipal bonds.
In turn, some of the closed-end funds' prospectuses actually disclosed the increased risk associated with leverage, investment in below-grade securities and speculative junk bonds, and other aggressive strategies and higher rates of default, but because Miller purportedly never read the documents to begin with, this information did not make it to Miller's customers.
The findings state Miller negligently misrepresented and failed to disclose these and similar material facts to several customers, falsely declaring that one customer's investment in the UIT was "safe" and if the customer continued to hold the UIT to trust termination, he would receive his entire $150k principal and five percent interest.
FINRA noted those statement were false: the UIT was not a safe investment, the value of the investment at termination could be significantly lower than principal, and the customer's investment had actually already dropped in value by $2,000 at the time Miller purportedly made his false statements.
Miller's BrokerCheck report indicates 12 total disclosures, including several settled customer disputes relating to unsuitably risky, misrepresented, or deficiently disclosed UIT investments, including one customer who said she thought she was purchasing a one-year CD with interest and was never informed that she instead was purchasing an unsecured investment with risk of loss.
If you have invested with David Michael Miller, formerly of Huntington Investment Company and National Bank, or with any broker or financial adviser whose unsuitable recommendations or omissions of material fact(s) due to a lack of due diligence—such as a complete failure to so much as read UIT or other securities prospectus documents—have proven harmful to your interests or resulted in principal or investment losses, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.