Allegation’s seriousness, case information, and how it affects investors
Kristopher Kessler, a broker registered with American Trust Investment Services, is facing serious allegations that have left many investors questioning what action to take. As Benjamin Franklin once said, “An investment in knowledge pays the best interest.”
The FINRA disciplinary action alleges that he engaged in an outside business activity without prior written notice to his firm, American Trust Investment Services. He also allegedly submitted false annual compliance certifications to his firm.
You may wonder why this is alarming for investors. Carrying out outside business or selling away is prohibited not only by company policies but also by financial regulations. It usually refers to a situation where a financial advisor brokers a deal between an investor and a third party for private investments bypassing the integral checks and balances within the firm.
These allegations impact investors directly. Firstly, it reflects negatively on the broker’s reliability and credibility, considering that false compliance certifications underlie serious ethical issues. Secondly, breaches such as outside business activities can put investor’s capital at risk since they bypass the rigorous safeguards of the brokerage firm.
Financial advisor’s background, broker dealer and past complaints
Kessler is no stranger to the financial world, having passed numerous financial exams. He maintains registrations in multiple states in both brokerage and investment advisory capacities. Throughout his 21-year career, he has registered with nine different firms.
However, the American Trust Investment Services broker has faced other controversies in the past. As you navigate your path as an investor, it’s vital to consider the track record of your financial advisor because, as per data from the Public Investors Arbitration Bar Association, over 90% of advisors with multiple marks on their disciplinary record continue bad behaviors.
Explanation in simple terms and the FINRA Rule
You may wonder what this means for an average investor, more specifically, what is an outside business activity or a false compliance certificate? Well, according to FINRA Rule 3270, brokers are required to keep their firms in the loop about any potentials ventures or private deals. This communication allows firms to assess possible conflicts of interest or risks to their clients, and failure to comply is a serious violation.
FINRA Rule 2010, on the other hand, captures the essence of trustworthiness in the financial industry. It binds brokers to high standards of commercial honor and equitable principles of trade.
Consequences and lessons learned
The allegations against Kessler are indeed severe. Besides the reputational damage, it could lead to financial penalties, suspension, or in extremes, expulsion from the industry. For investors, it begs the question of whether their investments were affected or if their advisor was entirely honest with them.
As an investor, this case serves as a stark reminder to stay vigilant and proactive. Regularly monitoring your investment accounts, researching your advisor’s background through platforms like FINRA’s BrokerCheck, and asking questions about investments that seem inconsistent with your financial goals can serve as preventive measures against falling victim to potential misconduct. As always, it’s better to be safe than sorry.
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