Investment fraud is a serious offense that can have severe consequences for both the perpetrator and the victims. Recently, the Department of Financial Protection and Innovation of the State of California alleged that Kevin Paffrath performed unlicensed investment adviser activities. The allegations are based on activities that took place from May 30, 2021, through June 26, 2021, during fundraising livestreams held on his YouTube channel for his campaign for California Governor.
The Allegation’s Seriousness and Case Information
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The Department of Financial Protection and Innovation’s concern had to do with two fundraising livestreams hosted on YouTube where “Meet” Kevin Paffrath solicited donations for his California Governor’s campaign in exchange for commentary on various stocks. The Department claimed this was rendering unlicensed investment adviser activities in violation of California Corporations Code section 25230.
Mr. Paffrath agreed to enter into a Consent Order to settle the matter without either admitting or denying that he had violated any California law or regulation. As part of the Consent Order, Mr. Paffrath agreed to desist and refrain from any unlicensed investment adviser activities and to pay an administrative penalty of $5,000.00.
Explanation in Simple Terms and the FINRA Rule
In simpler terms, the Department of Financial Protection and Innovation of the State of California accused Kevin Paffrath of offering investment advice without the necessary license. This is a violation of the Financial Industry Regulatory Authority (FINRA) rules, which require anyone providing investment advice to be properly licensed and registered.
FINRA is a self-regulatory organization that oversees brokerage firms and their registered representatives. It is tasked with protecting investors by ensuring that the securities industry operates honestly and fairly. Violating FINRA rules can result in penalties, including fines, suspension, or even expulsion from the industry.
Why It Matters for Investors
Investors rely on the advice of investment advisers to make informed decisions about their investments. When an adviser is not properly licensed, there is a risk that the advice they provide may not be sound or in the best interest of the investor. This can lead to significant financial losses for investors.
Furthermore, unlicensed advisers are not subject to the same regulatory oversight as licensed advisers. This means they are not held to the same ethical and professional standards, and there is a higher risk of fraudulent or unethical behavior.
Red Flags for Financial Advisor Malpractice and How Investors Can Recover Losses
Investors should be aware of certain red flags that may indicate financial advisor malpractice. These include advisors who are not properly licensed, who make unrealistic promises about investment returns, who recommend investments that do not align with the investor’s goals or risk tolerance, or who fail to fully disclose the risks associated with an investment.
If you believe you have been the victim of investment fraud or financial advisor malpractice, you may be able to recover your losses through FINRA arbitration. Haselkorn & Thibaut, a national investment fraud law firm with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating the advisor and company.
With over 50 years of experience and an impressive 98% success rate, Haselkorn & Thibaut has successfully recovered financial losses for investors. They offer free consultations to clients and operate on a “No Recovery, No Fee” policy. You can reach them at their toll-free consultation number, 1-800-856-3352.
