The investment fraud attorneys at Gana Weinstein LLP are currently investigating American Portfolios Financial Services, Inc. (American Portfolios) broker Jimmy Kuhn (Kuhn). According to BrokerCheck Records kept by the Financial Industry Regulative Authority (FINRA), Kuhn has been subject to four customer disputes. The majority of these concern unsuitable investments, breach of fiduciary duty, and excessive use of margin.
In January 2018, a customer alleged that Kuhn had breached his fiduciary duties, and had placed the customer in unsuitable investments. This case was settled at $70,000.
In December 2015, a customer alleged that Kuhn had breached fiduciary duties, placed the customer into unsuitable investments, misrepresented the investments, and executed unauthorized trades in the account. The dispute was settled at $60,000.
In November 2008, a customer alleged that his margin account was much larger than he had authorized, and that this excessive use of margin led to great damages in his account. The dispute was settled at $150,000.
Trading on margin occurs when the investor borrows funds from the brokerage firm and agrees to keep a minimum account balance. However, margin trading increases investor risk and the volatility of the account, especially if it’s excessive and results in the account going below the minimum account balance.
Brokers owe a fiduciary duty to their customers. When a broker recommends an investment to an investor, the broker has a duty to:
• Understand the nature of the investment’s risks, rewards, and strategy before recommending the investment;
• Make only suitable recommendations to the investor based upon the investor’s objectives, needs, and circumstances;
• Furnish information to the investor that would be material to the investor’s decision about the investment recommendation; and
• Not misrepresent or omit material information.
The number of complaints against Kuhn are unusual compared to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Kuhn has been in the securities industry since September 1999 and has been registered with American Portfolios since December 2009. From June 2009 to November 2009, Kuhn was registered with Morgan Stanley Smith Barney. From April 2007 to June 2009, Kuhn was registered with Morgan Stanley & Co., Incorporated. From October 2002 to April 2007, Kuhn was registered with Morgan Stanely DW Inc. From September 2000 to September 2002, Kuhn was registered with Mantis Securities, Inc.
Gana Weinstein LLP’s investment fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of unsuitable investments and breach of fiduciary duty. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.