On September 24, 2013, the Securities and Exchange Commission brought an administrative proceeding against former securities broker Diego Hernandez. Hernandez was registered with FINRA through AXA Advisors, LLC from April 2012 until February 2013 and through Allstate Financial Services, LLC from August 2005 until April 2012. Hernandez is also the owner of the Lakewood, Colorado firm The Wealth Management Partners, LLC.
It appears that Hernandez misappropriated approximately $921,000 from 13 Colorado-based investors through a fraudulent securities offering. Specifically, the SEC alleges that: “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.”
Between July 2011 and January 2013, Hernandez allegedly told clients that he was offering and selling “safe” securities that would provide both liquidity and flexibility. Hernandez also allegedly told clients that he would invest their money in corporate bonds, or other “safe” investments with guaranteed annual interest rates, but instead used the money for personal and business expenses. In a typical Ponzi scheme fashion, Hernandez also appears to have used funds raised from investors to repay earlier investor
In June 2013, FINRA barred Hernandez associating with any FINRA member in any capacity after he refused to respond to its requests for information and documents regarding his business activities. FINRA had also accused Hernandez of engaging in outside business practices (i.e. “selling away”) while was registered with AXA.
In addition to owning Wealth Management, Hernandez also owns and controls DFHR Investments, Inc., a corporation that has held a “delinquent status” with the Colorado Secretary of State since 2011. He also owns and controls HD Mile High Marketing, Inc., and is a 49 percent owner of the Peak Training Center.
Brokerage firms are required to enforce supervisory systems reasonably calculated to ensure that their brokers are acting in compliance with all applicable rules and regulations. It appears that AXA and Allstate may have failed in this respect. It is possible that Hernandez’s customers may be able to recover their losses by pursuing claims against AXA and/or Allstate for their supervisory failures through arbitration at FINRA Dispute Resolution.
Customers of Hernandez and/or The Wealth Management Partners are encouraged to contact the law firm of Blau & Malmfeldt at 312-443-1600 for a no-obligation consultation. Blau & Malmfeldt is a law firm that represents investors across the United States in securities, commodity futures, partnership, and shareholder rights disputes.