According to FINRA, Mercer Hicks III was barred from association with any FINRA member in all capacities and ordered to pay disgorgement of $38,812.60 on January 11, 2022, after an Office of Hearing Officers decision became final.

Hicks was found in violation of customer-specific suitability obligations by recommending purchases of high-risk, illiquid, non-traded securities offered by several real estate investment trusts and a business development corporation to senior customers without satisfying suitability requirements. The recommendations were specifically unsuitable for each customer considering their ages, financial situations, and investment profiles.

The prospectuses of these investments contained unequivocal warnings that investing involved a high degree of risk, including complete loss of investment, and that the investments were suitable only for persons who would not need liquidity. None of the customers had tolerance for high-risk investments. For some customers, Hicks' recommendations excessively concentrated their liquid assets in high-risk, illiquid securities. Hicks received $38,812.60 in commissions from these recommendations.

Additionally, Hicks violated reasonable-basis suitability obligations by failing to conduct reasonably diligent investigation of the investments he recommended. He was ignorant of significant features of the securities, including their numerous inherent risks. Hicks did not understand what the business development corporation invested in or the risks involved. Similarly, he did not understand the risks of the non-traded REITs, did not know they were high-risk investments, and was unaware that prospectuses warned investors should be able to afford complete loss of their investments.

Suitability obligations exist to protect investors from recommendations that do not align with their financial profiles and investment objectives. This is especially critical for senior investors who often have limited time horizons and cannot afford significant losses.

This case illustrates the importance of working with advisors who thoroughly understand the investments they recommend and carefully consider whether those investments match your specific needs and circumstances.