According to FINRA, David Thomas Hixon was named as a respondent in a FINRA complaint alleging that he failed to provide a complete response to FINRA's requests for information and documents in connection with its investigation into the circumstances of his termination from his member firm.

The complaint alleges that Hixon's firm filed a Form U5 disclosing that he had been terminated as a result of concerns that he borrowed from a customer and asked other persons, including a customer and a coworker, for loans. Borrowing from customers is generally prohibited under FINRA rules because it creates conflicts of interest and puts customers in difficult positions. The rules exist to prevent representatives from exploiting their relationships with customers for personal financial benefit.

FINRA alleges that Hixon failed to provide complete responses to its requests for information. Specifically, he failed to provide any documents relating to his receipt of funds in connection with a loan he obtained from a certain customer, failed to provide copies of any loan agreements or other documents relating to the loan, and failed to provide any documents evidencing his claimed repayment of the loan. Additionally, Hixon allegedly failed to confirm whether, apart from the two customers named in FINRA's requests, he had solicited or obtained loans from any other customers or coworkers, and if he had solicited other loans, he failed to indicate the intended purpose of such loans.

The missing information and documents are material to FINRA's investigation into whether Hixon improperly borrowed from a customer, whether he repaid that customer, and whether and why he solicited other customers and coworkers for loans. Without this information, FINRA cannot determine the full scope of Hixon's conduct, the number of affected customers, or whether customers suffered financial harm.

Because this is an unadjudicated complaint, findings have not been made regarding the allegations, and Hixon has the opportunity to respond and defend against the charges. However, the case illustrates the importance of cooperation with regulatory investigations and the serious view FINRA takes of borrowing from customers. Investors should be aware that financial professionals are generally prohibited from borrowing from customers and should report any such requests to firms and regulators. The complaint stage represents FINRA's formal initiation of proceedings, not a determination of guilt.