Former Wells Fargo Broker, Kurt Gunter, Suspended By FINRA Relating To Sales of Unit Investment Trusts (UITs)
Kurt Gunter (CRD # 2747789) was a Financial Advisor at Wells Fargo Advisors in Bee Cave, Texas. Kurt Gunter has been in the securities industry since 1996 and previously worked at Stifel, Nicolaus & Co. and Raymond James.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on Novbember 20, 2020, FINRA sanctioned Kurt Gunter, suspending him from associating with any broker-dealer for a period of three months and fining him $10,000. The sanction related to the short-term sale of unit investment trusts, or UITs, which have been a significant regulatory focus of FINRA since 2018.
A Unit Investment Trust is a closed-end investment company typically issues redeemable securities (or “units”), like a mutual fund, which means that the UIT will buy back an investor’s “units,” at the investor’s request, at their approximate net asset value (NAV). A UIT typically will make a one-time “public offering” of only a specific, fixed number of units (like closed-end funds). Many UIT sponsors, however, will maintain a secondary market, which allows owners of UIT units to sell them back to the sponsors and allows other investors to buy UIT units from the sponsors.
Specifically, the FINRA sanction stated:
“Without admitting or denying the findings, Gunter consented to the sanctions and to the entry of findings that he engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts (UIT) in customer accounts. The findings stated that Gunter recommended that his customers roll over a UIT before its maturity date to purchase a subsequent series of the same UIT, which generally had the same or similar investment objectives and strategies as the prior series. Gunter’s recommendations caused his customers to incur unnecessary sales charges and were unsuitable in view of the frequency and cost of the transactions. Gunter’s customers received reimbursement of the excess sales charges from his member firm in connection with FINRA’s separate settlement with the firm. The findings also stated that Gunter signed switch letters that were sent to customers that contained inaccurate or missing information about the costs that they incurred as a result of early rollovers of UITs. The switch letters were intended to provide customers with necessary information about the switch transaction, including its costs. Customers were required to sign and return the letters to the firm acknowledging the switch transaction. Although Gunter verbally notified customers of the costs of UITs, 96 of the UIT switch letters that Gunter signed and that were sent to customers either contained inaccurate information about the costs customers incurred in connection with their early UIT rollovers or failed to specify the costs.”
For a copy of the FINRA sanction, 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.
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