Securities Lawyers Blog
Securities attorneys from Gana Weinstein LLP are investigating Kestra Investment Services, LLC (Kestra Investment Services) broker Mitchell Walk (Walk).
According to BrokerCheck records, Walk has been subject to 5 customer complaints, 2 of which are still pending. The majority of these complaints regard unsuitable investment recommendations.
In August 2017, a customer alleged that Walk made unsuitable investment recommendations to the customer and that Kestra Investment Services failed to properly supervise this activity. The client has requested $72,000 in damages. This dispute is currently still pending.
In October 2016, a customer alleged that in August 2014, Walk misrepresented material facts about variable annuities in his investment recommendations to customers. The customer has requested $350,000 in damages. This dispute is currently still pending.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.
Variable annuities are often unsuitable investments for the average retail investor. A variable annuity is complex financial and insurance product in which the insurer pays the investor a monthly payment, and the investor puts the payment into investments. The benefits of variable annuities are often outweighed by the terms of the contract including surrender charges, mortality and expense charges, management fees; market-related risk, and rider costs. Variable annuities are high sales commission products for financial advisors and sometimes advisors push these products on persons who do not need them or cannot benefit from them.
The number of complaints against Walk is unusual compared to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Walk entered the securities industry in 2000 and has been registered with Kestra Investment Services since 2001. From 2000 to 2001, Walk was registered with Securities America, Inc.
Investors who have suffered losses 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.