According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Scott Niekamp (Niekamp), currently associated with Northwestern Mutual Investment Services, LLC, has at least 4 disclosable events. These events include one customer complaint, 3 regulatory events, alleging that Niekamp recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on February 23, 2023.
The California Insurance Commissioner found that the disciplinary actions taken by FINRA and the State of Missouri in June 2021 and August 2021 respectively, constitute grounds for the Commissioner to suspend the Representative’s California insurance license and licensing rights for seven days.
FINRA BrokerCheck shows a final customer complaint on August 02, 2021.
The Enforcement Section of the MO Securities Division alleged violation of Section 409.4-412(d)(5)(c).
FINRA BrokerCheck shows a final customer complaint on June 09, 2021.
Without admitting or denying the findings, Niekamp consented to the sanctions and to the entry of findings that he engaged in two outside business activities (OBA) without providing prior written notice to his member firm. The findings stated that the firm approved Niekamp’s request to participate in an OBA with a company as a passive investor and his activities would be limited to reviewing corporate documents, attending quarterly board meetings, and filing tax returns. Niekamp later updated his OBA disclosures to reflect he was no longer involved with the company. However, Niekamp engaged in other OBA on behalf of the company. Niekamp also received a 2% ownership interest in an LLC which partnered with the company on several potential projects. Niekamp did not disclose the additional OBA he conducted through the company or his membership interest and activities on behalf of the LLC. Niekamp also made false statements regarding his OBS on six compliance questionnaires. The findings also stated that Niekamp made two loans totaling $450,000 to a firm customer without notifying or obtaining prior approval from the firm. Niekamp’s firm customer and friend approached him about a possible loan to assist the customer in obtaining bank financing and covering payroll taxes for his business. Niekamp and his wife loaned the customer $250,000 via a check drawn on their joint account. Later Niekamp and his wife loaned the customer another $200,000. Niekamp also falsely stated on a compliance questionnaire that he had not loaned money to a firm customer.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $5,000,000.00 on April 28, 2021.
Customer alleges that in a series of interactions prior to February 18, 2015, the Representative misled him by recommending he invest in a private equity security and failed to disclose material facts concerning the investment, including that the Representative himself was a shareholder. Customer also alleges that the Representative made false representations about the investment that caused him to lose money, that the Representative engaged in a civil conspiracy, and that he breached a fiduciary duty to the customer by recommending an unsuitable investment.
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. The SEC has stated that Reg BI is drawn from fiduciary principles that are common to both brokers and investment advisors including an obligation to act in the investor’s best interest and prohibiting an advisor from placing their own interests ahead of the investor’s. There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which require brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations include three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest. Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Niekamp entered the securities industry in 2000. Niekamp has been registered as a Broker with Northwestern Mutual Investment Services, LLC since 2000.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.