- July 21, 2020
- David A Noyes & Co.
Previously registered broker James Kirchner (CRD # 2852217) is a Registered Investment Adviser at, Fourstar Wealth Advisors, LLC in Chicago, IL. James Kirchner has been in the securities industry since 1997 and previously worked as a registered Financial Advisor at IFS Securities, David A. Noyes & Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated, and UBS Financial Services Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), since February 2001, James Kirchner was the subject of seven (7) customer complaints, alleging sales practice misconduct:
• March 2020—”Customer alleges that alternative investments recommended were not suitable.” The matter settled for $90,000.
• January 2020—”Customers allege that investments made in private placements during 2016 and 2017 may be unsuitable.” The matter settled for $145,000.
• July 2019—” Customer alleges 2016 investment made in private placement is unsuitable.” The matter settled for $50,000.
• May 2019—”Customer alleges that investments made in private placements were unsuitable.” The matter settled for $165,000.
• June 2018—”Customer alleged the representative never explained margin to him fully, resulting in his being sold out in some positions during a market downturn.” The matter settled for $15,000.
• September 2009—”TIME FRAME: JULY 21, 2008 – SEPTEMBER 17, 2009 CLIENT ALLEGES THAT HIS FA FAILED TO FOLLOW HIS INSTRUCTIONS TO SELL 10,000 SHARES OF MWY AT $4.20 A SHARE. THE ALLEGED DAMAGES ARE ESTIMED TO BE IN EXCESS OF $5,000.” The claim was denied.
• February 2001—”CLAIMANT ALLEGES UNAUTHORIZED AND UNSUITABLE TRADES; UNAUTHORIZED DISBURSEMENT OF FUNDS.”
In addition to the customer complaint disclosures, in 2014, James Kirchner was discharged by Merrill Lynch for allegations relating to “altering a client document.”
For a copy of James Kirchner’s CRD, click https://brokercheck.finra.org/individual/summary/2852217#disclosuresSection
Private placements is a broad term that describes securities that are not offered for sale through a public exchange. These can include promissory notes, private equity offerings, small, start-up businesses, etc. Private Placements are issued under Regulation D under the Securities Act of 1933. Regulation D provides exemptions from the more rigorous Securities and Exchange Commission (SEC) registration requirements and allows companies to offer and sell securities without extensive disclosures. The absence of standard disclosure requirements often creates.
The Securities Exchange Commission, federal courts, and FINRA have all found that brokerage firms have a duty to conduct a reasonable investigation concerning the private placements issuer’s representations concerning the security. A brokerage’s firm’s due diligence obligation also stems from suitability obligations requiring the broker to have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. In order to meet the due diligence obligation, the brokerage firm and/or financial advisor must make reasonable efforts to gather and analyze information about the private placement, the issuer and its management, the business prospects of the issuer, the assets held by or to be acquired by the issuer, the claims being made by the issuer in the offering materials, and the intended use of proceeds of the offering. The failure to determine this and other material information would necessarily preclude a financial advisor from disclosing to a customer the material aspects of a transaction.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. 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.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s:
• Other investments
• Financial situation and needs
• Tax status
• Investment objectives
• Time horizon
• Liquidity needs
• Risk tolerance
• Any other information disclosed by the customer
The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.