Three Investor Lawsuits Allege John Krohn was Selling Unapproved Securities
According to an article in Investment News yesterday, former Principal Securities financial advisor John Krohn (CRD # 2722975) has 3 massive lawsuits pending against him for allegations of selling unapproved securities also known as “selling away”.
The Financial Industry Regulatory Authority (FINRA) reportedly suspended Krohn for three months in May 2018 after he reportedly engaged in outside business activities and purportedly “made personal purchases totaling $7.9 million of private securities away from his member firm without notifying it about those activities or purchases,” according to his broker profile. He was also fined $10,000.
When a FINRA registered representative conducts business outside the scope of the brokerage firm where they are registered, the act can be considered “selling away.”
Some brokers, looking to supplement their income, will go outside the traditional market, trying to find other products to push.
FINRA’s findings also stated that Krohn’s alleged failure to give his firm prior written notice of the outside business activities prevented the firm from considering issues such as whether his outside business activities would interfere with his responsibilities to the firm or its customers, and whether customers or the public would incorrectly view the activities as part of the firm’s business.
Krohn’s private securities transactions were purportedly outside the scope of his employment with the firm and he did not notify his firm about his role in them nor whether he had received or expected to receive selling compensation, according to FINRA. Krohn apparently made some of those purchases through the investing company that he owned jointly with a customer.
The three customer claims were reportedly filed in 2019 and 2020 and are all still pending. According to Investment News, the claim filed in February 2019 involves a family who is suing Principal for $28 million for allegations of failure to supervise, negligence among others.
According to his broker profile on FINRA’s website, Krohn was registered with Principal Securities in West Des Moines, Iowa from 1996 until January 2017.
Filing a Complaint against your Brokerage Firm
The White Law Group is investigating potential securities fraud claims involving John Krohn and the liability his former employers may have for failure to properly supervise him.
If a registered broker “sells away” from their firm, the brokerage firm may still be liable for negligent supervision of their broker representative and may be responsible for investment losses in a FINRA dispute resolution claim.
When brokers abuse client accounts and conduct transactions that violate securities laws, such as selling unapproved securities, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.
If you are concerned about investments with John Krohn and Principal Securities, the securities attorneys at The White Law Group may be able to help you. Please call 888-637-5510 for a free consultation, or visit us on the web at www.whitesecuritieslaw.com.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois.