Did you know about Chad Koehn? He used to be a finance professional who ended up being sued for defrauding his customers.
Financial advisors get away with a lot thanks to the complex nature of securities and investments. This is why it’s vital to raise awareness against suspected scammers like Chad Koehn.
This post is to make people aware of the kind of scams they can face. Chad Koehn had faced allegations of running a cherry-picking scam.
I’m sharing snippets of the complaints people posted against Chad below:
Chad Koehn and United Capital Management of Kansas Under Scrutiny – A Victim’s Letter
A national regulator has taken action against Chad M. Koehn, suspending him from his position and fining him for scamming investors in a number of different investments.
For the purpose of bringing legal action against Chad Koehn and this cryptocurrency scam including bait-and-switch, we have enlisted the assistance of a reputable law firm.
After selling us Anthem Holdings Corporation, Koehn stated that we had purchased Hera Holdings, which is a group of Hera Software Development, also known as HERASOFT. However, we have not yet received the stock, and the stock is currently trading on the exchanges for $10. However, he claims that he sold it to us for 70 cents.
However, he will not give us the stock for the Hera FTAC, which is currently trading on the major exchanges, despite the fact that it is a tremendous gain on paper.
Even though Chad Koehn has been penalised and suspended from his position as an investment manager by the National Regulation Agency, this does not help us in any way when it comes to paying the mortgage on the farm.
In the present moment, he is promoting Red Neck Yachts and funding yet another cryptocurrency transaction.
I really hope that additional victims will get in touch with attorneys so that we can put an end to this pyramid fraud.
Investment Losses with Chad Mitchell Koehn? (Law Firms’ Ads for Victims)
Here, I’m sharing snippets of the promotions run by law firms for the victims of Chad Koehn.
After receiving a one-year suspension and a $10,000 fine in connection with findings that he engaged in private securities transactions (selling away) totalling approximately $1,475,000 without receiving approval from his previous firm, SA Stone Wealth Management, Inc. in Salina, Kansas, Chad Mitchell Koehn is the subject of an investigation by the national investment fraud lawyers. KlaymanToskes is conducting the investigation.
Investors who have experienced losses as a result of Chad Mitchell Koehn at the Salina, Kansas branch of SA Stone Wealth Management and/or United Capital Management are strongly encouraged to get in touch with Lawrence L. Klayman, Esq.
Allegations of private securities transactions of $1,475,000 that were carried out without approval
On October 21st, 2022, Koehn signed a Letter of Acceptance, Waiver, and Consent or “AWC” with the Department of Enforcement of the Financial Industry Regulatory Authority (FINRA). According to the AWC, Koehn violated FINRA Rules 3280 and 2010 by engaging in private securities transactions (known as “selling away”) that amounted to roughly $1,475,000 in sales to a minimum of 34 SA Stone Wealth Management clients. His company did not acquire consent from him, nor did he inform them of his intentions.
According to the AWC, on October 30th, 2020, SA Stone Wealth Management submitted a Uniform Termination Notice (Form U5) for Securities Industry Registration for Koehn. The notice said that he willingly resigned from his position at the firm.
More on Chad Mitchell Koehn:
Chad Mitchell Koehn has been working in the securities field for the past 28 years. He was formerly registered with SA Stone Wealth Management, Inc. from January 2004 until October 2020.
According to the FINRA Brokercheck Report that Koehn maintains, three investor complaints have been lodged against him, each of which requests more than two hundred and fifty thousand dollars in aggregate damages.
At the moment, Koehn is acting as the Chief Executive Officer of United Capital Management of Kansas, Inc. According to the Investment Adviser Firm Summary published by the Securities and Exchange Commission (SEC), the licences of this company in the states of Kansas and Texas have been revoked.
Which Private Securities Transactions (also known as “Selling Away”) Are There?
A private securities transaction is defined as “any securities transaction outside the regular course or scope of an associated person’s employment with a member,” according to Rule 3280 of the Financial Industry Regulatory Authority (FINRA).
A broker or investment advisor is said to be “selling away” in the context of private securities transactions when they engage in the act of selling an investment to a customer that is not offered by the brokerage firm that is executing the transaction and are doing so without the approval of their own brokerage firm.
In most cases, brokers who opt to offer their clients securities that have not been approved by their company do so with the assumption that they will be paid a “selling compensation,” and they may also be liable to punishment from the Financial Industry Regulatory Authority (FINRA). “Outside business activities” are something that brokers and advisors who are regulated by FINRA are required to report to both the regulators and their respective businesses. Through the use of the free Brokercheck tool provided by FINRA, investors are able to investigate the “outside business activities” of their broker.
A “cherry-picking” scheme is a deceptive practice in the financial industry where investment advisers allocate profitable trades to favored accounts—often their own or those of preferred clients while assigning less favorable or losing trades to other clients. This manipulation breaches fiduciary duties and undermines the integrity of financial markets.
Notable Cases and Statistics
While comprehensive statistics on cherry-picking schemes are limited due to their clandestine nature, several high-profile cases have shed light on the prevalence and impact of such frauds:
- Jonathan Vincent Glenn: The owner of GlennCap LLC in Connecticut was sentenced to 21 months in prison for defrauding clients of over $2.7 million through a cherry-picking scheme. Glenn allocated profitable trades to favored accounts, including his own, while assigning unprofitable trades to other clients.
- Ken Leech: Former co-chief investment officer at Western Asset Management, Leech was charged with orchestrating a $600 million cherry-picking scheme. He allegedly allocated profitable trades to a favored fund, resulting in significant losses for other portfolios and leading to substantial client withdrawals.
- SeaCrest Wealth Management: The SEC charged SeaCrest and an associated representative for failing to prevent a cherry-picking scheme that resulted in approximately $43 million in profits for favored accounts, while disfavored accounts received about $9 million.
Regulatory Actions and Preventive Measures
To combat cherry-picking and protect investors, regulatory bodies have implemented several measures:
- Enhanced Surveillance: The SEC employs sophisticated analytical tools to detect irregular trading patterns indicative of cherry-picking. By analyzing trade allocations and performance, the SEC can identify statistically improbable distributions of profitable trades.
- Enforcement Actions: The SEC actively prosecutes individuals and firms involved in cherry-picking. Penalties often include fines, disgorgement of ill-gotten gains, and industry bans. For instance, GlennCap LLC and its owner were ordered to pay over $3 million in penalties and were barred from the industry.
- Compliance Requirements: Investment advisers are mandated to establish and enforce policies that ensure fair trade allocation. Firms must document trade allocations promptly and monitor for any deviations that could indicate preferential treatment.
- Investor Education: Regulators encourage investors to remain vigilant and report any suspicious activity. Educating clients about their rights and the importance of transparent trade allocations helps in early detection of fraudulent practices.
Cherry-picking schemes erode trust in financial markets and can cause significant financial harm to unsuspecting clients. Through stringent enforcement, advanced surveillance, and robust compliance frameworks, regulators aim to detect and deter such fraudulent activities, ensuring a fair and transparent investment environment for all participants.
