FINRA filed a complaint alleging that former Financial West Group (San Francisco) and Paulson Investment Company (Novato, CA) broker Kelly Clayton Althar made unsuitable recommendations and excessively traded in two elderly customer accounts. Enforcement also accused Althar of over-concentrating an elderly client's accounts in risky securities despite the older customer's "low risk investments" objective.
The document states that the senior customer opened a brokerage and individual retirement account at Financial West Group in San Francisco with broker Althar (CRD #2666723) when she was 68 years old, stating a preference for low risk investments based on $161,000 held in her IRA and growth-plus-income-oriented mutual funds.
According to investigators, the elderly client acted in concert with her risk aversion preference by not actively trading in her IRA.
Nonetheless, the complaint charges, Althar "frequently" placed trades in both accounts without consulting the elderly client prior to these trades, even though this customer had not engaged in active trading in her IRA prior to opening accounts at Financial West Group. The document states that Althar's trades in the two accounts over the course of the relevant period generated nearly $140,000 in commissions, and caused approximately $187,000—or about 50%—in losses between the two accounts.
For instance, Althar purchased 696 shares of American Capital Agency Corp (AGNC)—characterized as an unsuitably risky (for the elderly client) real estate investment trust (REIT)—and sold those shares two months later at a loss.
Even after selling AGNC at a loss, Althar purportedly re-purchased even more AGNC shares (782 shares) just two months later, and again sold the shares for another loss which was more more significant: $8,000.
In addition to the $8,000 loss, FINRA said, Althar generated over $3,000 in commissions through the AGNC transactions.
The complaint also charged Althar with over-concentrating the elderly client's accounts in risky securities, purchasing securities issued by one business development company until that position comprised about 60% of the client's total portfolio value.
In regards to the excessive trading charge, FINRA wrote that Althar's trading strategy resulted in costs so high that profit was unlikely. Investigators found that the minimum return required just to break even in either account was 20%, which Enforcement concluded was an unsuitable strategy. In all, the client suffered "extensive losses" with her accounts' value, comprising a majority of her net worth, dropping by over 50%.
Althar's BrokerCheck report reveals a settlement over a 2014 customer dispute alleging unsuitability and frequent trading, while a 2013 disclosure reveals a criminal charge of one count of felony grand theft, which the report says was expunged effective 12/21/2006.
If you have invested with a broker or financial adviser such as former Financial West Group rep Kelly Clayton Althar whose excessive trading, overconcentration, and/or unsuitable recommendations have proven harmful through the generation of excessive commissions or significant losses to your investment portfolio, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.