FINRA has suspended broker Scott Niekamp from the securities industry for three months for engaging in two outside business activities without providing prior written notice to his firm, Northwestern Mutual Investment Services, LLC. Additionally, Niekamp loaned money to a firm customer in violation of the firm’s written supervisory procedures and FINRA rules.
Niekamp’s suspension is scheduled to begin on July 7, 2021, and end on October 5, 2021. He was fined $10,000.
If you have lost money with Scott Niekamp, or Northwestern Mutual Investment Services, LLC, contact FINRA arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
FINRA Letter of Acceptance, Waiver, and Consent (“AWC”)
Scott Niekamp and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on June 9, 2021. According to the AWC, from June 2011 to August 2017, Niekamp violated FINRA Rules 3270 and 2010 by engaging in two outside business activities without providing prior written notice to his firm, Northwestern Mutual Investment Services, LLC.
Niekamp also violated FINRA Rules 3240 and 2010 when he made two loans totaling $450,000 to a firm customer without notifying, or obtaining prior approval from the firm.
Outside Business Activities
From June 2011 to August 2017, Northwestern Mutual Investment Services, LLC’s written supervisory procedures required registered representatives to disclose and receive approval for any outside business activity (or changes thereto) prior to participation or the effective date of any change.
In May 2011, the firm approved Niekamp’s request to invest and participate in an outside business activity known as Commons Development Company (CDC), a developer of senior living facilities.
In November 2014, Niekamp updated his outside business activity disclosures to reflect that he was no longer involved in CDC.
However, from June 2011 to August 2017, Niekamp engaged in other outside business activities on behalf of CDC. For example, Niekamp reviewed and edited pitch materials for potential investors; hired and paid print vendors; contributed capital towards a possible real estate purchase; and met with individuals seeking to partner with CDC on future projects. Niekamp also engaged in negotiations for a possible land purchase through CDC’s d/b/a, Urban Prairie Development.
In 2011, Niekamp also received a 2% ownership interest in Keystone Technologies, LLC (Keystone). Keystone provides technology solutions for senior living facilities and partnered with CDC on several potential projects. Niekamp assisted Keystone in its attempts to secure financing by facilitating meetings with a local bank and referenced Keystone and Urban Prairie Development in the signature block of the personal e-mail address he used to conduct his outside business activities.
Niekamp did not disclose the additional outside business activities he conducted through CDC and Urban Prairie or his membership interest and activities on behalf of Keystone to Northwestern Mutual Investment Services, LLC until 2018. Niekamp also made false statements regarding his outside business activities on six compliance questionnaires.
FINRA Rule 3270 prohibits registered persons from being “an employee, independent contractor, sole proprietor, officer, director, or partner of another person, or be[ing] compensated, or hav[ing] the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his member firm unless he has provided prior written notice to the member, in such form as specified by the member.”
A violation of FINRA Rule 3270 also constitutes a violation of FINRA Rule 2010.
FINRA Rule 2010 requires associated persons to “observe high standards of commercial honor and just and equitable principles of trade.”
Loan to Customer
In June 2015, Niekamp’s firm customer and friend approached Niekamp about a possible loan to assist the customer in obtaining bank financing and covering payroll taxes for his business. The discussions continued in July and, in September 2015, Niekamp and his wife loaned his firm customer $250,000 via a check drawn on their joint account. In May 2016, Niekamp and his wife loaned his firm customer another $200,000.
Niekamp did not disclose or seek prior approval from his firm for the loans. Niekamp also falsely stated on a compliance questionnaire that he had not loaned money to a firm customer.
FINRA Rule 3240(a) prohibits registered representatives from borrowing or lending money to his or her customer unless (1) their member firm employer has written procedures that permit the borrowing and lending of money between registered representatives and customers, and (2) the borrowing or lending arrangement meets at least one of five circumstances specified in the rule. Even if these requirements are satisfied, FINRA Rule 3240(b) requires representatives to seek and obtain prior written approval from their member firm employer, unless the firm’s procedures provide otherwise.
A violation of FINRA Rule 3240 also constitutes a violation of FINRA Rule 2010.
Northwestern Mutual Investment Services, LLC’s written supervisory procedures prohibited registered representatives from lending money to firm customers, except for immediate family members.
Scott Niekamp (CRD#: 3277810)
Niekamp has 20 years of experience in the securities industry and has been registered as a broker with Northwestern Mutual Investment Services, LLC in Chesterfield, MO, since June 2000.
His FINRA CRD shows four customer disputes, including two that are still pending.
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Scott Niekamp, or Northwestern Mutual Investment Services, LLC, contact FINRA arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at email@example.com, firstname.lastname@example.org or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.