William Baum (CRD#: 1528847), a registered representative with Great American Investors, Inc. in Overland Park, Kansas, is currently involved in a pending customer dispute, according to his BrokerCheck record accessed on November 12, 2019. On September 10, 2019, William Baum became involved in a customer dispute in which clients allege that he “failed to recommend appropriate investments, disclose all conflicts of interest and fully inform claimants about the associated risks.” The clients, who are seeking $87,000 in damages, are disputing recommendations that William Baum allegedly made from 2014 to 2017. Similarly, in a customer complaint filed on May 13, 2019, clients allege that William Baum “recommended unsuitable trading strategies and failed to act in their best interest,” allegedly breaching his fiduciary duty, between 2008 and 2019.
The securities products at issue in both cases are over-the-counter (OTC) equity, options, and penny stocks. Also known as “unlisted stocks” or “microcap stocks,” OTC equity allows investors to trade shares of companies not listed on a national exchange. These companies are often smaller companies that cannot yet afford the high fees of listing on the Nasdaq or New York Stock Exchange (NYSE). They are often startups or companies going through a restructuring. While the OTC equity market represents an exciting opportunity for investors to get in on the ground floor by investing in an up-and-coming company, the OTC equity market is fraught with risk and not suitable for every investor. Fraud runs rampant on the OTC bulletin board (OTCBB), the dealer network through which OTC equity is traded. The risk for fraud is also heightened in the world of penny stocks. In 2014, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) warned that aggressively-marketed penny stocks may actually be stocks of dormant “shell companies” with few, if any, operations. A more well-known scam is the “pump and dump,” in which fraudsters buy penny stocks, artificially inflate the price through a misinformation campaign, and then rapidly sell their shares, leaving investors with essentially worthless stock. When penny stocks are manipulated, investors are manipulated as well. While OTC equity and penny stocks both allow investors to invest in startups, they come with risks, and investors should take care to do their own due diligence before investing in these ventures.
While William Baum’s most recent disclosures involved unsuitable OTC equity investments, this is not the only time that William Baum has found himself embroiled in securities disputes. We previously wrote about suitability claims brought against William Baum. In addition to dealing with suitability claims, William Baum was sanctioned by FINRA on July 25, 2017. He was fined $5,000 and suspended for 30 days. What happened? He allegedly sent text messages to 16 clients about securities transactions, thus preventing his firm from monitoring his advisory activity. He was working for Great American Investors at the time.
In addition to his current position with Great American Investors, Inc. (CRD#: 28489), William Baum has worked for five other brokerage firms. Over his 33-year career in the securities industry, he has also worked for:
- First Union Securities, Inc. (CRD#: 19616) of St. Louis, Missouri
- George K. Baum & Company (CRD#: 36354) of Kansas City, Missouri
- Dain Bosworth Incorporated (CRD#: 7600) – SEC registration status terminated on May 8, 1998
- General Securities Corp. (CRD#: 15062) of North Kansas City, Missouri
- L. Stern & Co. Inc. (CRD#: 8327) – SEC registration status terminated on April 4, 2009
If William Baum was your broker or if you fear your broker may have violated securities rules, don’t hesitate to contact the securities attorneys of Fitapelli Kurta. Call (877) 238-4175 or email firstname.lastname@example.org for your free consultation with an experienced securities attorney.