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Caroline Korn, Pinnacle Investments Broker, Suspended for Alleged Unsuitable Mutual Funds Trades

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FINRA announced it suspended Caroline Korn from associating with firms registered with FINRA.  FINRA (Financial Industry Regulatory Authority, Inc.) registers and regulates securities brokers and brokerage firms.

FINRA announced Korn’s suspension on February 16, 2018 in a Letter of Acceptance, Waiver and Consent (AWC).  The AWC stated FINRA suspended Korn for four months for allegedly placing unsuitable and unauthorized trades.

Korn violated FINRA Rule 2111, known as the “Suitability Rule,” by recommending six of her customers place short-term trades in class A mutual funds, said FINRA.  FINRA alleged the trades were unsuitable because class A mutual funds are intended to be held long-term since purchasing them involves significant up-front costs.  Korn reportedly recommended her customers frequently buy and sell the mutual funds within a year, causing them losses while generating Korn commissions.

The AWC states Korn committed further violations by exercising discretion in 14 customer accounts without obtaining written authorization from the customers to place discretionary trades.

This is Korn’s second FINRA suspension.  She was suspended in October 2012 for 15 days for allegedly exercising discretionary authority in 11 of her customers’ accounts without obtaining written authority to exercise discretion.

In 2015, three of Korn’s customers filed claims against her and her former firm, Brighton Securities, alleging unsuitable investment purchases, according to FINRA records.  At least two of the claims alleged that Korn made excessive trades without proper authorization to do so and generated excessive commissions.

Caroline Korn entered the securities industry as a General Securities Representative in 2003.  From December 2005 through March 2014, she was registered with Brighton Securities, Corp.  On March 24, 2014, Brighton publicly disclosed that it discharged Korn for allegedly “trading excessively in several accounts.”

In April 2014, Korn registered with Pinnacle Investments LLC where she remained through March 2018, according to FINRA records.

Recovery Options for Losses Due to Excessive Trading and Commissions

Security rules and laws prohibit brokers from excessively trading in customer accounts to intentionally generate fees and commissions for the brokers and their firms.  Additionally, rules require brokers to obtain customers’ express written authority before making discretionary trades in customers’ accounts.

Moreover, brokerage firms owe investors a duty to closely supervise their brokers to ensure they do not commit violations, including by investigating brokers before they are hired and closely monitoring discretionary trades.  Firms should view brokers’ customers frequently placing short-term trades in investments with large up-front fees as red flags.

Courts and arbitrators may hold firms jointly responsible for their brokers’ misconduct under agency law theories and for failing to meet their supervision responsibilities.

If you have questions about losses or large fees or commissions you suffered while investing with Caroline Korn, contact Marquardt Law Office LLC to speak with a securities attorney and receive a free case evaluation.  You may be entitled to recover your losses.

Marquardt Law Office LLC is a securities law firm located in Chicago, IL that represents clients nationwide who have suffered losses due to misconduct such as fraud and negligence.

Adam J. Marquardt

Adam Marquardt represents investors in securities litigation claims such as unsuitable investments, negligence, and fraud. He is dedicated to recovering financial losses for investors, primarily through FINRA arbitration. Adam’s background includes experience as a FINRA regulator, an accountant and auditor, and an attorney who recovered $8 million litigating cases involving fraudulent financial practices. Adam is a certified public accountant and attorney licensed in Illinois.

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