Principal Securities Facing Claims for Churning Allegations
Principal Securities Inc. is facing legal trouble in Minnesota, where a lawsuit and FINRA arbitration claims have been filed against the firm regarding alleged misconduct by a former registered representative, according to an article in Investment News this week.
The lawsuit, reportedly brought by the Legacy of Angels Foundation, accuses the ex-broker of negligent supervision, forfeiture of fees, and unsuitable recommendations related to the purchase and churning of variable annuities. Variable annuities are complex investment products often associated with high costs and potential risks.
The foundation, based in Rosemount, Minnesota, claims losses estimated between $3 million to $5 million due to the alleged misconduct.
This incident is not the first involving a Principal broker in the Midwest. In a previous case, an advisor in Iowa was accused of engaging in unauthorized investments, resulting in a settlement exceeding $4 million in 2021.
Churning Fraud
When a broker engages in excessive trading of securities in a customer’s account without considering the client’s investment goals and primarily to generate commissions that benefit the broker, the broker may be engaged in an illegal practice known as churning.
Churning fraud is an illegal and unethical practice. The more a broker trades the more they get paid. In many cases this is enough incentive for unscrupulous brokers to over-trade in a client’s account.
Often churning fraud occurs when a broker has discretionary authority (either actual or implied) of a client’s account, meaning they do not need the client’s consent to trade on their behalf. Churning may result in significant losses and may expose the client to unnecessary tax liabilities.
Securities Fraud Attorneys
If you are concerned about your investments, please call the securities attorneys at The White Law Group at 1-888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.
Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 30 years of securities law experience, The White Law Group has the expertise to help investors defrauded in securities, investment, and financial business transactions attempt to recover their investment losses.
