John Michael Krohn of West Des Moines Iowa a stockbroker formerly employed by Principal Securities Inc. has been fined $10,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he engaged in private securities transactions and outside business activities. Letter of Acceptance Waiver and Consent No. 2017052852801 (May 29, 2018).
According to the AWC, from April of 2014 to January of 2017, while Krohn was associated with Principal Securities, Inc., he served as director or officer of four separate companies. Evidently, one of those companies was owned by Krohn and a customer of the firm, and had been involved in the investment of distressed and developmental stage companies.
The AWC stated that the activities Krohn engaged in were not within the scope of his business relationship with Principal Securities. Yet, Krohn failed to inform Principal about those companies despite having known about his obligation to disclose outside business activities; he disclosed other outside business activities to the firm. Krohn’s failure to disclose his activities reportedly hindered Principal Securities from evaluating the activities to determine if his responsibilities to customers and the firm would be impacted as well as whether Krohn’s activities would cast a negative shadow on Principal Securities’ business model. FINRA concluded that Krohn violated FINRA Rules 2010 and 3270 as a result of failing to furnish written notice to the firm about his outside business activities.
The AWC further stated that from December of 2012 and December of 2016, Krohn placed at least twenty-four purchases that totaled $7,900,000.00 in the securities of ten companies. Evidently, Krohn was not permitted within his role at Principal Securities to effect those transactions. Krohn evidently failed to inform the firm about the transactions he executed, preventing the company from understanding Krohn’s role and possible compensation in connection with effecting the purchases. The AWC revealed that Krohn utilized a company he owned with a customer to effect a portion of the purchases. FINRA found Krohn’s failure to inform the firm about the transactions to be violative of FINRA Rules 3280, 3040 and 2010.
FINRA Public Disclosure confirms that Krohn has been identified in two customer initiated investment related disputes containing accusations of his misconduct while employed with Principal Securities, Inc. In particular, on November 21, 2007, a customer filed an investment related complaint involving Krohn’s conduct where the customer requested $5,696.00 in damages based upon allegations of suitability relating to the rollover of the customer’s individual retirement funds into a variable annuity. Then, on September 7, 2017, a customer filed an investment related complaint regarding Krohn’s activities in which the customer sought $97,000.00 in damages supported by accusations that Krohn solicited the customer’s investment in a private placement away from Principal Securities, Inc.
Krohn’s registration with Principal Securities, Inc. was terminated as of January 12, 2017.
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