A panel of FINRA arbitrators ordered Fifth Third Securities and one of its registered reps to compensate a customer for allegedly making unsuitable investments that set the customer back more than $125,000.
Mark Vernon Rottler, the broker involved in the dispute, and Fifth Third Securities will fork over $100,000 to settle the complaint, according to a filing in FINRA's arbitration awards database.
The customer, Robert Kenneke, alleged that Rottler made unsuitable recommendations of mutual funds, structured products and equities. According to Kenneke's attorney, Thomas Burke of Chicago law firm Thomas F. Burke P.C., Kenneke opened an account with Fifth Third Securities in 2002, which included two IRAs. In the spring of 2012, he grew alarmed as the value of his portfolio was falling even as the market was "climbing up exponentially," Burke said. He discovered that about 40% of his portfolio was invested in gold and precious metals, which Burke noted "was not a good allocation for IRA funds." The two IRAs lost $88,000.
"Basically, the broker was managing the account without power of attorney," said Burke. "He was making all the trading decisions and then just sending statements to my guy."
Another issue had to do with a private placement Rottler allegedly recommended for his client. In the summer of 2006, Rottler approached Kenneke about a neighbor's farm in Iowa that was going to be turned into an ethanol plant and proposed that he invest in the venture through Blue Marble Investors, Burke said. Kenneke wound up losing his entire $125,000 investment.
"I don't know if I've ever been in a case where the two people testifying had more divergent stories," Burke noted. His client claimed that Rottler came to him about Blue Marble Investors, while Rottler claimed that it was Kenneke who approached him about the investment opportunity.
With regard to the IRA losses, Rottler alleged that Kenneke made all the trading decisions and that he was merely an order taker. Kenneke disagreed, saying that he had nothing to do with determining what was invested.
In the end, the panel decided to rule in Kenneke's favor. In addition to ordering Rottler and Fifth Third Securities to pay Kenneke $100,000, the panel hit Rottler and/or his firm with $10,975 in hearing session, adjournment and other fees. Kenneke had to pay $3,725 in hearing session assessments.
Larry S. Magnesen, a spokesperson for Fifth Third Bank, declined to comment, saying only that the bank was pleased to bring the matter to a close. The bank's and Rottler's attorney, Christen M. Steimle of law firm Dinsmore & Schohl in Cincinnati, did not return an email seeking comment. Rottler did not return a call or an email sent via BrightScope Advisor Pages, an online directory for financial advisors, seeking comment.