- June 23, 2021
- Northwestern Mutual Investment Services, LLC
Scott Niekamp (CRD#: 3277810) is a dually registered Broker and Investment Advisor at Northwestern Mutual Investment Services, LLC in Chesterfield, MO. He entered the securities industry in 2000.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2021, FINRA sanctioned Scott Niekamp, levying a civil and administrative penalty of $10,000 and suspending him in all capacities for a period of three months beginning on July 6, 2021 and ending October 4, 2021. The FINRA sanction states, “Without admitting or denying the findings, Niekamp consented to the sanctions and to the entry of findings that he engaged in two outside business activities (OBA) without providing prior written notice to his member firm. The findings stated that the firm approved Niekamp’s request to participate in an OBA with a company as a passive investor and his activities would be limited to reviewing corporate documents, attending quarterly board meetings, and filing tax returns. Niekamp later updated his OBA disclosures to reflect he was no longer involved with the company. However, Niekamp engaged in other OBA on behalf of the company. Niekamp also received a 2% ownership interest in an LLC which partnered with the company on several potential projects. Niekamp did not disclose the additional OBA he conducted through the company or his membership interest and activities on behalf of the LLC. Niekamp also made false statements regarding his OBS on six compliance questionnaires. The findings also stated that Niekamp made two loans totaling $450,000 to a firm customer without notifying or obtaining prior approval from the firm. Niekamp’s firm customer and friend approached him about a possible loan to assist the customer in obtaining bank financing and covering payroll taxes for his business. Niekamp and his wife loaned the customer $250,000 via a check drawn on their joint account. Later Niekamp and his wife loaned the customer another $200,000. Niekamp also falsely stated on a compliance questionnaire that he had not loaned money to a firm customer.”
For a copy of the FINRA sanction, click here.
In addition, Scott Niekamp has been the subject of four customer complaints, including two that remain pending, including the following:
● April 2021–”Customer alleges that in a series of interactions prior to February 18, 2015, the Representative misled him by recommending he invest in a private equity security and failed to disclose material facts concerning the investment, including that the Representative himself was a shareholder. Customer also alleges that the Representative made false representations about the investment that caused him to lose money, that the Representative engaged in a civil conspiracy, and that he breached a fiduciary duty to the customer by recommending an unsuitable investment.” The customer dispute is pending, and damages of $5 million are requested.
● July 2019–”The customer alleges that in or around October 2018, the Representative did not accurately inform him of the tax consequences of transferring money from a non-qualified account to fund the purchase of a fixed annuity. The customer alleges this resulted in an unexpected tax liability.” The customer dispute was settled for $24,016.
● February 2018–”Customer alleges that in a series of interactions prior to February 18, 2015, the Representative misled him by recommending he invest in a private equity security and failed to disclose material facts concerning the investment, including that the Representative himself was a shareholder. Customer also alleges that the Representative made false representations about the investment that caused him to lose money, that the Representative engaged in a civil conspiracy, and that he breached a fiduciary duty to the customer.” The customer dispute is pending.
● February 2018–”Customer alleges that in or about June of 2012, the Representative misled her by recommending she invest in a private equity security and failed to disclose material facts concerning the investment, including that the Representative himself was a shareholder. Customer also alleges that the Representative made assurances regarding investment performance that caused her to lose money, and that the investment was unsuitable.” The customer dispute was settled for $425,000.
For a copy of Scott Niekamp’s FINRA BrokerCheck, 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 agee, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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.