Securities Arbitration Lawyer Blog
FINRA has suspended financial advisor Kurt Jason Gunter (CRD No. 2747789) from the securities industry for three months and fined him $10,000.
FINRA alleged that between July 2013 through December 2016, Kurt Gunter engaged in an unsuitable pattern of short-term trading of Unit Investment Trusts in customer accounts. FINRA also alleged that Mr. Gunter signed switch letters that were sent to customers that contained inaccurate or missing information about the costs that the customers’ incurred due to early rollovers of Unit Investment Trusts.
Kurt Gunter was a stockbroker at Stifel, Nicolaus & Company, Inc. from June 2013 through August 2017. He was registered with Stifel, Nicolaus & Company, Inc.’s branch offices in St. Louis, Missouri, and Austin, Texas.
After resigning from Stifel, Nicolaus & Company, Inc., Mr. Gunter was registered with Wells Fargo Clearing Services, LLC in Austin, Texas.
If you have suffered financial losses investing with Kurt Jason Gunter, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential evaluation of your accounts.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Stifel, Nicolaus & Company, Inc.
FINRA’s Allegations – Gunter Engaged in an Unsuitable Pattern of Early Rollovers of UITs
Between July 2013 and December 2016, Gunter engaged in an unsuitable pattern of recommending that his customers’ rollover Unit Investment Trusts (UITs) early. Specifically, FINRA alleged:
- On more than 270 occasions, Gunter recommended that his customers rollover their UITs more than 100 days before maturity.
- Although Gunter’s customers generally held UITs with a 24-month maturity period, Gunter recommended that his customers sell their UITs after holding them for a short period and use the proceeds to purchase a new UIT.
- On average, Gunter’s customers held UITs with a 24-month maturity for less than ten months (297 days).
- Of the approximately 270 early rollovers recommended by Gunter, more than 120 were “series-to-series” rollovers. In other words, on more than 120 occasions, Gunter recommended that his customers roll over a UIT before its maturity date to purchase a subsequent series of the same UIT.
- A subsequent series UIT generally has the same or similar investment objectives and strategies as the prior series.
- Gunter’s recommendations caused his customers to incur unnecessary sales charges and were unsuitable because of the frequency and cost of the transactions.
FINRA’s Letter of Acceptance, Waiver, and Consent No. 2018057226601 also includes an example of Mr. Gunter’s conduct. In October 2013, Gunter recommended that a customer purchase a UIT with an investment strategy of seeking “above-average capital appreciation” and held a portfolio of “well-capitalized” stocks in companies with “strong market positions.” The UIT had a 24-month maturity period. Notwithstanding, after holding the security only for 76 days, Gunter recommended that his customer sell the UIT and use the proceeds to purchase a later series of the same UIT issued in the fourth quarter of 2013. The UIT purchased in the fourth quarter of 2013 had the same or a similar investment objective and strategy as the UIT purchased in October 2013. Gunter’s recommendation that his customer sell the first UIT approximately 22 months before its maturity and use the proceeds to buy a subsequent series of the same UIT is an example of “series to series” rollovers. These transactions caused his customer to incur increased sales charges to purchase what was, essentially, the same investment.
FINRA’s Allegations – Gunter Signed Inaccurate Switch Letters
From July 2013 through December 2016, Gunter signed switch letters that were sent to customers that contained inaccurate or missing information about the costs that the customers’ incurred due to early rollovers of Unit Investment Trusts. Specifically, FINRA alleged:
- Gunter signed 127 switch letters in connection with early UIT rollovers. The switch letters were intended to provide customers with necessary information about the switch transaction, including its costs.
- Although Gunter may have verbally notified customers of the costs of UITs, 96 of the 127 switch letters (75.6%) contained inaccurate information about the costs customers incurred in connection with their early UIT rollovers or failed to specify the costs.
- Specifically, 75 of the UIT switch letters understated the sales charges associated with the switch by at least 25%, and 21 of the letters did not list any sales charge associated with the new UIT purchase, even though the switches did result in new sales charges.
- On average, the switch letters that contained inaccurate information understated the sales charges that the customers incurred by approximately $2,500.
Unit Investment Trusts
A Unit Investment Trust (UIT) is a U.S. financial company that offers investors shares or “units” in a fixed portfolio of securities through a one-time public offering. A UIT matures on a specific date; often, after 15 or 24 months, at which point, the underlying securities are sold. The proceeds received from the sale of the underlying securities are paid to the investors. A UIT’s portfolio is not actively managed between the trust’s inception and its maturity date.
Unit Investment Trust sponsors often offer UIT product lines in successive “series.” Successive series of UITs often have the same or similar investment objectives and investment strategies as prior series.
Investors can expect to pay various sale charges and fees, including an initial sales charge, a deferred sales charge, a creation and development fee, and a fee for annual operating expenses.
Stifel, Nicolaus & Company, Inc. – A Duty to Supervise
Financial institutions like Stifel, Nicolaus & Company, Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as excessive trading, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
If you have lost money with financial advisor Kurt Gunter or Stifel, Nicolaus & Company, Inc., contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.