Former HD Vest Investment Services Broker, Michael Kamperman, Supsended by FINRA For Eighteen Months And Fined $20,000 For Allegedly Making Unsuitable Ivestment Recommendations
Michael Kamperman (CRD # 2002603) was a Financial Advisor at HD Vest Ivestment Services in Waco, TX from 2014 to 2017. Michael Kamperman was in the securities industry from 1989 to 2017 and previously worked at Prospera Fianacial Services, Inc., UBS Financial Services, Inc., Rotan Mosle Inc., and Shearson Lehman Hutton Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on June 20, 2019, Michael Kamperman was suspended for eighteen months and fined $20,000.
According to the sanction “Without admitting or denying the findings, Kamperman consented to the sanctions and to the entry of findings that he made unsuitable investment recommendations in the 401(k) and IRA retirement accounts of customers. The findings stated that Kamperman over concentrated the customers’ accounts in high risk, speculative oil and gas – energy sector securities -, and also recommended that one customer purchase and hold a leveraged inverse exchange-traded note, which was only meant to be held for one trading day, in his 401(k) retirement account for nearly 16 months. Kamperman’s investment recommendations were unsuitable for each customers based on the customer’s financial situation and needs, risk tolerance, investment experience, and investment objectives. Additionally, Kamperman had no reasonable basis to believe that his recommendation that one of these customers purchase and hold a short-term leveraged inverse exchange-traded note in his retirement account for an extended time was suitable for any customer. The customers suffered over $407,000 in trading losses as a result of implementing Kamperman’s investment recommendations. The customers filed an arbitration regarding their trading losses. The matter has been resolved through settlement with Kamperman’s member firms.”
In recent years, Financial Advisors recommended energy sector investments because the price of oil was high, which helped the balance sheet of energy sector companies and, in turn, their stock price. Moreover, energy companies paid above-average dividends to shareholders. Beginning in late 2014, the price of oil began to decline, causing a cascading effect to occur in the value of energy sector securities. Customers that were recommended to invest in energy sector securities for either price appreciation or high income experienced substantial and often times irreplaceable losses in the value of their investments.
For a copy of Michael Kamperman’s FINRA disciplinary action details click here
In addition to the FINRA sanction Michael Kamperman has been the subject of five costumer complaint disclosures alleging sales practice misconduct:
• August 2020—”Client alleged the trades placed in her account were unsuitable and excessive. Time frame of the alleged activity was 2015 through June 2017.” Alleged damages are $300,000 and the matter remains pending.
• August 2020—”Client alleged the trades placed in her account were unsuitable and excessive. Time frame of the alleged activity at Prospera was 01/2005 to 12/ 2014.” Alleged damages are $300,000 and the matter remains pending.
• June 2016—”Claimants alleged that their accounts decreased in value, their investments were not suitable and over-concentrated and that they were not informed of the risk associated with their investments. The claimants also alleged a breach of fiduciary duties and contract.” The matter settled for $320,000.
• September 2007—”MISMANAGEMENT OF ACCOUNT; FREQUENT TRADING; UNSUITABLE INVESTMENTS;” The matter was denied.
• October 1998—”THE CLIENT ALLEGES THAT THE PAINEWEBBER IE ENGAGED IN UNAUTHORIZED AND EXCESSIVE TRADING, MADE UNSUITABLE INVESTMENTS, MADE MISREPRESENT- ATIONS AND LACKED DUE DILIGENCE. DAMAGES ALLEGED ARE $85,110.42 DURING THE TIME PERIOD OF 10/10/97-6/98. PRODUCTS NOT SPECIFIED.” The matter settled for $65,000.
For a copy of Michael Kamperman’s CRD, click here
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 represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, 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 email@example.com.
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