Former Principal Securities Broker, John Krohn, Sanctioned By FINRA For Selling Away
The Wolper Law Firm is currently investigating claims against John Krohn, a former Financial Advisor at Principal Securities in West Des Moines, IA. John Krohn has been in the securities industry since the 1990s.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on May 29 2018, FINRA sanctioned John Krohn for engaging in unauthorized outside business transactions. This practice is referred to as “selling away.” It was alleged that John Krohn made “personal purchases totaling $7.9 million” and none of the transactions were approved by his firm.
FINRA strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.
The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.
In addition, John Krohn has two prior customer complaints for sales practice violations, including:
- September 2017—“Client is requestin reimbursement for an investment he made into a private placement…not offered by the firm.” The alleged damages were $97,000.
- November 2007—“Client’s husband is alleging that a variable annuity isn’t in the client’s best interest.”
To review a full copy of John Krohn’s FINRA disclosure report, click https://brokercheck.finra.org/individual/summary/2722975#disclosuresSection
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Trading long-term investment vehicles in short duration is per se improper as it presents very little benefit to the customer and only benefits the Financial Advisor, who earns commissions. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
If you or someone you know was a customer of John Krohn’s and you experienced investment losses, please contact the Wolper Law Firm at 800.931.8452 or by email at email@example.com to discuss your specific situation and the legal options available. The Wolper Law Firm represents investors nationwide in securities litigation and arbitration.