Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) former advisor Kristian Gaudet (Gaudet), formerly associated with Ameritas Investment Corp. (Ameritas) in Cut Off, Louisiana has been terminated by the firm for using client funds for personal use. Thereafter, in January 2019, Gaudet consented to the sanction and findings that he refused to appear for and provide FINRA on-the-record testimony concerning the internal investigation by Ameritas that Gaudet was found to have utilized client funds for personal use. Accordingly, Gaudet was barred by FINRA from the securities industry.
According to newsources, Gaudet arrested for stealing nearly $1 million from his clients. Gaudet was a former vice president of the Greater Lafourche Port Commission and owner of Kris Gaudet Insurance and Financial Services. Authorities received a complaint form a couple that found issues with a $350,000 investment made to “Winston Financial” in 2012. Authorities claim that the money was used for purposes other than the investment purposes for which it was intended. Authorities also accused Gaudet of using funds received in May from another couple to buy a home in Larose. Gaudet has been accused of frequently using money he received from investors for personal gain including using money clients paid for insurance to buy real estate.
At this time it is unclear the nature or scope of the alleged outside business activities (OBAs) and private securities transactions. Often accompanied with either disclosed or undisclosed OBAs is the risk of the sale of unapproved investment products – a practice known in the industry as “selling away” – a serious violation of the securities laws. In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds. When advisors convert or misappropriate funds they often created businesses or other vehicles to serve as a cover for the theft of funds.
The securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Gaudet entered the securities industry in 2000. From October 2003 until December 2018 Gaudet was registered with Ameritas out of the firm’s Cut Off, Louisiana office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.