Iowa Securities Attorneys
Investment fraud can happen anywhere—even in Iowa. A recent case of potential investment fraud in Iowa illustrates why you may need an Iowa securities attorney.
John Krohn (CRD#: 2722975), a former broker with Principal Securities, Inc. (CRD#: 1137) in West Des Moines, Iowa, is alleged to have engaged in “selling away,” enticing clients to invest in Spotlight Innovation, Inc. Spotlight Innovation was not a security sold by Principal Securities, Inc. Instead, it was a company in which John Krohn had a vested interest. He allegedly used his position of influence at Principal Securities, Inc. to entice investors to purchase shares of Spotlight Innovation, allegedly resulting in significant losses for investors. As a result, John Krohn was suspended from the securities industry for three months, from June 4, 2018 to September 3,2018, and was fined $10,000. A copy of his Acceptance, Waiver, and Consent (AWC) agreement with FINRA can be viewed here. Defrauded customers have filed a customer complaint against John Krohn and are seeking $28 million in damages.
This recent case illustrates that investment fraud can happen anywhere, and can be perpetrated by Iowa brokers. Thus, you may need an Iowa securities attorney. Read on to learn about how Iowa protects investors and what to do if you think you’ve been a victim of investment fraud.How Iowa Protects Investors from Broker Fraud
How does Iowa protect investors from broker fraud? The Iowa Insurance Division regulates the securities industry in Iowa. Helmed by Insurance Commissioner Doug Ommen, the Iowa Insurance Division plays a key role in investor protection. An Iowa securities attorney helps wronged investors in Iowa, but the state has a key role to play in protecting investors from fraud in the first place.
To that end, Iowa has strict requirements that must be met before any broker or securities agent can conduct business in Iowa. Any individual who represents a broker-dealer or an issuer to purchase or sell securities must be registered with the Iowa Insurance Division. However, some securities offerings (such as private placements offered to a select group of investors) are exempt from registration. The Division licenses securities agents. Iowa Code section 502.102 defines a securities agent as someone who represents a broker-dealer or an issuer to purchase or sell securities. The Iowa Insurance Division outlines the requirements for registration in a document published on their website. For example, agents selling securities for issuers and receiving compensation based on those activities must:
- Pass the Series 63 or Series 66 exam
- Pass the appropriate FINRA qualifying exam or obtain a waiver from FINRA
- Have the issuer fill out an application to the Iowa Insurance Division which contains:
- A statement of the issuer’s intent to employ the agent for the sale of its securities;
- the name, address, social security number, and proof of satisfaction of requirement numbers 1 and 2, above, for each agent;
- a complete description of the securities being sold; and
- a complete and accurate Form U-4 (Uniform Application for Securities Industry Registration or Transfer)
- Pay $40 to the Iowa Insurance Division
By mandating that all securities agents go through this vetting process with the state, the Iowa Insurance Division keeps tabs on the activities of all securities agents. If Iowans are unsure as to whether or not their broker or other securities professional is properly registered with the state, the Iowa Insurance Division encourages individuals to call the office. If Iowans have serious concerns, they should consider contacting an Iowa securities attorney.
Of course, it is better to prevent fraud in the first place. The Iowa Insurance Division maintains an Investor Education & Financial Literacy program. One of its most active and well-known initiatives is When I’m 65, an educational television program narrated by David Brancaccio of American Public Media’s Marketplace. The program is geared toward individuals concerned about their retirement and looking for information about how to avoid scams. Along with its popular videos, When I’m 65 has also produced a series of “Action Guides.” These Action Guides are available as downloadable PDFs and include:
- Managing Your Money When You’re Starting Out
- Starting to Save for Retirement
- Ramp Up Savings for Your Retirement
- Getting Closer to Retirement
- Making Your Money Last in Retirement
Last but not least, the state of Iowa protects Iowans from fraud by enforcing the Iowa Uniform Securities Act. The Iowa Uniform Securities Act is Iowa’s version of a “blue sky law,” regulating the securities industry at the state, as opposed to federal level. (For more information about blue sky laws, see our article “What are ‘Blue Sky Laws’?”) While the Iowa’s blue sky law is broad and far-reaching, in brief the Iowa Uniform Securities Act:
- delineates what securities are exempt from registration with the state;
- explains the registration requirements for brokers, broker-dealers, and securities agents;
- outlaws fraudulent or deceptive practices in the securities industry;
- describes what transactions are prohibited;
- describes the process by which violations are investigated; and
- lays out the penalties for violating Iowa securities laws.
If you believe that your broker violated the provisions of the Iowa Uniform Securities Act, it’s time to call an Iowa securities attorney.Next Step: Contact a Iowa Securities Attorney
While investing is one way to grow your net worth, as an investor you must stay informed about fraud to protect yourself and safeguard your financial future.
If you have questions about your investments, please contact the experienced securities attorneys of Fitapelli Kurta. Our securities fraud attorneys have worked with investors from Iowa. Whether you’re in Iowa City, Ames, Dubuque, Davenport, or any other city or town in Iowa, we’re here to help you. We only get paid if you do. Our attorneys work on contingency; we only collect a fee from clients if we can recover money on their behalf. Call (877) 238-4175 or email email@example.com for your free case consultation.