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Texas Investment Advisor Registration Revoked

Robert Linkin

By Robert Linkin | April 22, 2016

Complex Litigation, Securities Litigation

The Texas Securities Board has entered a Disciplinary Order revoking the registration of Dallas Investment Advisor Sarah Helen Hancock. Among other things, Hancock apparently withdrew grossly excessive amounts of money from clients’ accounts, and on at least one occasion, fraudulently misrepresented an account’s value to justify the amount she collected as management fees.

Hancock’s registration was officially revoked on April 15. She was required by the Board to provide clients with the name of a licensed individual who will oversee any activity at her firm, Hancock-Smith, LLC, that requires licensing.

Between 2007 and 2015, Hancock collected money from clients that wildly exceeded what those clients were contractually required to pay.

For example, from 2007 through 2009, Hancock withdrew $1.6 million as management fees from a single client’s account. The actual fees Hancock should have withdrawn from the client’s account during that period totaled approximately $45,000. According to the Order, Hancock withdrew $1.5 million than she was entitled to withdraw.

During the Board’s investigation, Hancock claimed that $1.5 million was used to make loans to Traveler Overseas Holdings LLC, an entity which apparently shared office space with Hancock. Hancock was unable to provide any documentation associated with the alleged loans, nor any records substantiating her claim that payments were made to Traveler Overseas on behalf of the client.

Instead, the Board uncovered proof that Hancock had withdrawn unjustified fees from the client’s account and deposited them into her personal account, where the money was quickly dissipated. One such example occurred in August 2007, when Hancock withdrew $62,320 from the client’s account and then issued $51,000 in checks to herself and to American Express to pay a $63,000 personal bill. This pattern continued for multiple clients during 2010 through 2015, providing invoices to at least one client that vastly overstated the client’s account balance. Based on the contractual 1% management fee, inflated portfolio values were used to justify fee payments far in excess of what was justified.

During the investigation into Hancock’s withdrawals from client accounts, Hancock repeatedly provided the Board with false and misleading information.

If you are a client of Sarah Helen Hancock or Hancock-Smith, LLC, or believe you have been the victim of investment advisor or broker-dealer misconduct, please feel free to contact Robert Linkin at Duggins Wren Mann & Romero. Rob can be reached at 512-744-9300 or rlinkin@dwmrlaw.com

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