Steven M. Knowlton of IMS Securities, Inc. in Ann Arbor, Michigan is involved in six pending customer disputes involving allegations that he recommended unsuitable securities. Some of the disputes also involve allegations of fraud and churning.
Last year, a FINRA arbitration panel ruled against Knowlton and IMS in a case involving allegations that they recommended unsuitable high-risk private placement investments to the Claimant, including Behringer Harvard and ICON Leasing. The arbitration panel ultimately found that Knowlton misled the Claimant with misrepresentations regarding the investments. In addition to awarding damages, the panel denied the Respondents’ request for expungement.
All financial advisors have a duty to recommend suitable investments and investment strategies to their clients. A recommendation is suitable if it comports with the client’s investment objectives, risk tolerance, investment experience, investment time horizon, liquidity needs, and income needs. The duty to recommend suitable investments cannot be disclaimed through risk disclosures or waivers.
Unauthorized trading occurs when a broker who does not have discretionary trading authority over an account undertakes a trade without obtaining the client’s prior approval. Unauthorized trading is often a means to another end, such as churning or misappropriation of assets.
To prevail on a churning claim, an investor generally has to prove three things: (1) that the broker has engaged in excessive trading in the investor’s account (turnover ratio of 6 is presumptively excessive); (2) that the broker had actual or de facto control over the account; and (3) that the trading was not reasonable or justifiable.
If you are a current or former customer of Mr. Knowlton or IMS Securities and have suffered investment losses, Mika Meyers, PLC may be able to help you. We regularly evaluate and bring claims on behalf of investors who have suffered investment losses as a result of unsuitable investment recommendations. If you wish to discuss your claim with an experienced attorney who specializes in this area, call Daniel J. Broxup at (616) 632 8059.