Luke Michael Johnson of Scottsdale, Arizona, a stockbroker registered with Coastal Equities Inc., has been fined $15,000.00 and suspended for 18 months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Johnson made unsuitable recommendations to customers. Department of Enforcement v. Luke Johnson, Order Accepting Offer of Settlement No. 2019061213402 (February 1, 2024).
From April of 2015 to May of 2018, while associated with Coastal Equities Inc., Johnson recommended over $2,350,000.00 in illiquid alternative investments to nine of his customers. The regulator stated that this was unsuitable given customers’ investment profiles. The stockbroker caused an over-concentration in illiquid and high-risk securities, which went against customers’ financial situations and objectives. Moreover, Johnson, or those stockbrokers under his direction, falsified the customers’ financial information on several documents. This included underreporting their investment in alternative investments and overestimating the customers’ net worth and liquid net worth. The AWC indicated that Johnson violated the securities broker dealer’s policy on limiting customers to investing no more than 35 percent of their liquid net worth in alternative investments.
The AWC also stated that Johnson’s actions led to inaccurate and falsified records. He violated FINRA Rules 2111 and 2010 by making unsuitable recommendations, and Rule 4511 by causing the securities broker dealer to maintain accurate financial records.
FINRA Public Disclosure shows that Johnson is cited in a customer initiated investment related dispute concerning his conduct while associated with Coastal Equities Inc. On October 31, 2023, a customer filed a FINRA securities arbitration claim involving Johnson’s conduct, requesting $225,000.00 in damages. The claim alleged that Johnson made unsuitable recommendations in alternative investments during his time at Coastal Equities Inc. FINRA Arbitration No. 23-03138.
On June 9, 2023, customers filed a FINRA securities arbitration claim against Johnson, seeking $117,922.90 in damages. Johnson allegedly made unsuitable investment recommendations in DPP and LP interests. FINRA Arbitration No. 23-01700. Johnson is also referenced in a securities arbitration claim where the customer sought $190,000.00 in damages. The allegations against Johnson include unsuitable recommendations in direct investments. FINRA Arbitration No. 23-01020 (April 17, 2023).
On August 1, 2023, a different securities arbitration claim involving Johnson’s conduct was settled for $30,000.00. The claim was based on allegations that Johnson, while associated with Coastal Equities Inc., made unsuitable recommendations in direct participation programs and limited partnership interests. FINRA Arbitration No. 22-00495.
Another securities arbitration claim alleged that Johnson made unsuitable investment recommendations between 2014 and 2017. The claim, which involved direct investments and real estate securities, was settled for $100,425.00 in damages. FINRA Arbitration No. 21-01546 (October 17, 2022).
Johnson was also the subject of a securities arbitration claim alleging unsuitable recommendations in real estate securities and direct investments in 2018. The case was settled for $275,000.00 on October 17, 2022. FINRA Arbitration No. 21-01270.
Johnson was associated with Coastal Equities Inc. in Scottsdale, Arizona from April 3, 2012, to December 13, 2019.
