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Retiree Couple Says NBT Bank VP & LPL Financial Broker Bret Hartman Unsuitably Recommended XOP Note

Senior Investors Lose Money in Risky Structured Product Tied To Price of Oil  

An elderly retiree couple has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim against LPL Financial, LLC and its broker, Bret Alexander Hartman, to recover losses they sustained in a structured product tied to the price of oil. In their broker fraud case, they are alleging unsuitable investment recommendations, misrepresentations and omissions, and other claims. 

Our structured product fraud lawyers at Shepherd Smith Edwards and Kantas (SSEK Law Firm) are representing these claimants, who are in their eighties and nineties and never should have been invested in a structured note that exposed them to the volatile oil and gas sector.

LPL Financial Invested Couple’s Retirement In Risky XOP Note 

According to their FINRA arbitration claim, the couple entrusted LPL Financial and Bret Hartman to take care of their retirement funds. Yet, for no reason that makes any sense whatsoever, Hartman recommended that they invest in a structured note that tracked the XOP, which is the Oil & Gas Exploration & Production Index. 

The XOP tracks the stocks of companies in the oil and gas sector. But because this index uses an “equal-weight approach”– meaning that it gives exposure to an industry that while dominated by a few big names also gives a huge bias to midcap and small stocks– the XOP usually brings with it a higher market risk compared to the less volatile cap-weighted benchmark. 

Not only that, but structured products and notes, in general, are unsuitable for investors like this couple, who are older, conservative, unsophisticated investors with a portfolio that can’t handle too much volatility or risk.

Structured notes hardly ever trade on the secondary market. They are illiquid, have low odds of accurate daily pricing because they don’t trade on an exchange, and are calculated by a matrix, rather than net asset value (NAV). This means pricing is on a best-guess approach. Yet, LPL Financial misrepresented the XOP note to the claimants as a safe investment.

The couple then proceeded to lose most of what they invested in this product. 

There is no reason that LPL Financial broker, Bret Hartman, should have ever recommended a structured note, let alone one tied to the XOP, to the claimants. That said, what structured notes do offer for a stockbroker that sells them is higher commissions.

LPL Financial Failed to Properly Supervise Hartman 

It was LPL FInancial’s job to adequately supervise not just Hartman but also the transaction, and a supervisor who was doing their job properly would have never signed off on this type of trade for the couple. Yet, LPL typically doesn’t have on-sight supervisors and its agents are usually self-supervised.

Now, the claimants are alleging gross lack of supervision, intentionally negligent, as well as grossly negligent behavior, breach of fiduciary duty, breach of agreement, and violation of state securities laws.

According to his BrokerCheck record (CRD#: 4502046), Hartman has worked 14 years in the industry. While his registration notes that he’s been with four firms, Hartman’s firm history appears to show him having been at nine firms, but the listing doesn’t name any of them except for AXA Advisors. At some of the broker-dealers where he was registered, Hartman appears to have worked there for less than a year. He also is currently listed on NBT Bank’s Investment Services web page as a vice president and financial consultant.

Structured Note Lawyers Representing Oil and Gas Investors

SSEK Law Firm helps investors who’ve suffered losses in structured notes to pursue claims against the brokers and firms that were negligent in recommending and selling these investments to them. 

Our oil and gas fraud attorneys have been fighting for investors for 30 years. We represent retirees,  retail investors, inexperienced investors, high net worth individual investors, and institutional investors. SSEK Law Firm has recovered many millions of dollars on our clients’ behalf. If you have worked with Bret Hartman or believe that you were recommended unsuitable investments by any financial advisor, contact us today.

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