Karl Robert Herrmann – and the firm that employs him or her – is regulated by the Financial Industry Regulatory Authority (FINRA).
If you are like most people, before you go out to dinner at a new restaurant, you probably take a quick look at the reviews. This makes sense; you are going to pay for an expensive dinner, and you need to be sure that you are getting a good value.
Yet, when choosing a financial advisor, many people fail to conduct this same level of due diligence. Before turning over access to your money, you need to be sure that you have found a financial advisor that you can trust. Here, our audit report, including details of allegations, complaints, and sanctions will help you decide whether or not to invest with Karl Robert Herrmann.
The stock market is a device for transferring money from the impatient to the patient… Warren Buffet
BrokerComplaints.com is currently investigating allegations related to Karl Robert Herrmann. We provide a free platform for investors to help them in their claims against negligent brokers and brokerage firms.
About Karl Herrmann
Karl Robert Herrmann is an Investment Adviser. Karl Robert Herrmann’s Central Registration Depository (CRD) number is 2706681 and the FINRA Profile can be found at – https://brokercheck.finra.org/individual/summary/2706681.
Click here to download a Detailed Audit Report for Karl Robert Herrmann.
Karl Robert Herrmann has previously been reprimanded and has disclosures and/or client dispute(s) listed at FINRA BrokerCheck.
Accusations and Disclosures
You can find below, a quick snapshot of Karl Robert Herrmann’s regulatory actions, arbitrations, and complaints.
DISCLOSURE 1 –
- Event Date: 1/22/2014
- Disclosure Type: Employment Separation After Allegations
- Disclosure Resolution:
- Disclosure Detail :: Firm Name: NFP SECURITIES INC
- Termination Type: Voluntary Resignation
- Allegations: MR. HERRMANN IS THE SUBJECT OF AN INVESTIGATION BY FINRA FOR POTENTIAL VIOLATIONS OF FINRA RULE 2010 AND NASD RULE 3110. THE ALLEGED ACTIVITIES OCCURRED DURING MR. HERRMANN’S EMPLOYMENT WITH FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY.
DISCLOSURE 2 –
- Event Date: 1/7/2014
- Disclosure Type: Regulatory
- Disclosure Resolution: Final
- Disclosure Detail :: DocketNumberFDA: 2011029017001
- DocketNumberAAO: 2011029017001
- Initiated By: FINRA
- Allegations: FINRA RULE 2010, NASD RULE 3110: HERRMANN CONVERTED HIS MEMBER FIRM’S FUNDS TO HIS OWN USE. HERRMANN KNEW THAT BY IDENTIFYING A CORPORATE CREDIT CARD TRANSACTION AS A BUSINESS EXPENSE ON AN EXPENSE REPORT, HE WOULD CAUSE THE FIRM TO PAY THE CREDIT CARD COMPANY FOR THAT TRANSACTION. IN TOTAL, HERRMANN CAUSED THE FIRM TO PAY FOR PERSONAL ITEMS COSTING AT LEAST $1,000 IN AT LEAST 15 TRANSACTIONS DURING THE PERIOD. THEREFORE, HERRMANN CONVERTED THE FIRM’S FUNDS WHEN HE OBTAINED PAYMENT FROM THE FIRM FOR PERSONAL EXPENSES BY FALSELY CLAIMING THOSE EXPENSES WERE BUSINESS EXPENSES. HERRMANN’S PREPARATION OF FALSE EXPENSE REPORTS THAT HE SUBMITTED TO THE FIRM DURING THE PERIOD, FALSELY IDENTIFYING NUMEROUS PERSONAL PURCHASES ON THE CORPORATE CREDIT CARD AS BUSINESS EXPENSES AND INACCURATELY DESCRIBING THEM AS OFFICE SUPPLIES, CONSTITUTED FALSIFICATION OF RECORDS. HERRMANN’S SUBMISSION OF FALSE EXPENSE REPORTS ALSO CAUSED THE FIRM TO MAINTAIN INACCURATE BOOKS AND RECORDS. LATER, HERRMANN SUBMITTED HIS RESIGNATION TO THE FIRM AND IT TERMINATED HERRMANN’S REGISTRATIONS BY FILING A FORM U5. THE FORM U5 ALSO INDICATED THAT HERRMANN HAD VOLUNTARILY RESIGNED FROM THE FIRM AFTER ALLEGATIONS WERE MADE THAT ACCUSED HIM OF USING HIS CORPORATE CREDIT CARD FOR PERSONAL EXPENSES BUT DID NOT INDICATE THAT THE CHARGES WERE PERSONAL WHEN SUBMITTING HIS EXPENSE REPORTS, AND SUBMITTED DUPLICATE MILEAGE REIMBURSEMENT REQUESTS FOR BUSINESS TRAVEL. SHORTLY AFTER HERRMANN RESIGNED FROM THE FIRM, HE AGREED TO PAY THE FIRM $10,000 RELATING TO THE TRANSACTIONS THE FIRM HAD IDENTIFIED DURING ITS INVESTIGATION. THEREAFTER, HERRMANN WROTE A PERSONAL CHECK PAYABLE TO THE FIRM IN THE AMOUNT OF $11,712.58. THAT AMOUNT INCLUDED THE $10,000 HERRMANN HAD AGREED TO PAY AS WELL AS REIMBURSEMENT FOR CERTAIN ADDITIONAL PERSONAL AND OTHER EXPENSES HERRMANN MADE.
- Resolution: Decision & Order of Offer of Settlement
- Sanction Details :: Sanctions: Bar (Permanent)
- Sanction Details :: Registration Capacities Affected: All Capacities
- Start Date: 6/17/2014
- Regulator Statement: WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, HERRMANN CONSENTED TO THE SANCTION AND TO THE ENTRY OF FINDINGS THAT HE CONVERTED HIS MEMBER FIRM’S FUNDS TO HIS OWN USE. THE FINDINGS STATED THAT HERRMANN KNEW THAT BY IDENTIFYING A CORPORATE CREDIT CARD TRANSACTION AS A BUSINESS EXPENSE ON AN EXPENSE REPORT, HE WOULD CAUSE THE FIRM TO PAY THE CREDIT CARD COMPANY FOR THAT TRANSACTION. HERRMANN CONVERTED THE FIRM’S FUNDS WHEN HE OBTAINED PAYMENT FROM THE FIRM FOR PERSONAL EXPENSES BY FALSELY CLAIMING THOSE EXPENSES WERE BUSINESS EXPENSES. THE FINDINGS ALSO STATED THAT HERRMANN’S PREPARATION OF FALSE EXPENSE REPORTS CONSTITUTED FALSIFICATION OF RECORDS AND HIS SUBMISSION OF FALSE EXPENSE REPORTS CAUSED THE FIRM TO MAINTAIN INACCURATE BOOKS AND RECORDS. SHORTLY AFTER HERRMANN RESIGNED FROM THE FIRM, HE AGREED TO PAY THE FIRM $10,000 RELATING TO THE TRANSACTIONS IT HAD IDENTIFIED DURING ITS INVESTIGATION INTO HIS USE OF HIS CORPORATE CREDIT CARD. HERRMANN WROTE A PERSONAL CHECK PAYABLE TO THE FIRM FOR $11,712.58, WHICH INCLUDED THE $10,000 HERRMANN HAD AGREED TO PAY THE FIRM AS WELL AS REIMBURSEMENT FOR ADDITIONAL PERSONAL AND OTHER EXPENSES HERRMANN MADE.
DISCLOSURE 3 –
- Event Date: 7/21/2011
- Disclosure Type: Employment Separation After Allegations
- Disclosure Resolution:
- Disclosure Detail :: Firm Name: FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY, INC
- Termination Type: Voluntary Resignation
- Allegations: THE ASSOCIATE USED HIS CORPORATE CREDIT CARD FOR PERSONAL EXPENSES BUT DID NOT INDICATE THAT THE CHARGES WERE PERSONAL WHEN SUBMITTING HIS EXPENSE REPORTS, AND SUBMITTED DUPLICATE \MILEAGE\ REIMBURSEMENT REQUESTS FOR BUSINESS TRAVEL.
- Broker Comment: AT THE TIME OF MY VOLUNTARY RESIGNATION FOR A NUMBER OF PERSONAL AN PROFESSIONAL REASONS, IT WAS BROUGHT TO MY ATTENTION THAT SOME OF MY CORPORATE BUSINESS EXPENSES HAD COME INTO QUESTION. AS I WOULD TRAVEL THREE WEEKS OUT OF THE MONTH OR MORE, SOME EXPENSES WOULD NATURALLY BE INCURRED AS PERSONAL, SUCH AS HOTEL INCIDENTALS, EXTENDED HOTEL STAY AND CAR RENTALS, ETC. THESE PERSONAL EXPENSES WERE CLEARLY DOCUMENTED IN MY EXPENSE REPORTS WHICH WERE SUBMITTED EACH MONTH VIA AN ELECTRONIC WEB BASED PROGRAM. ALL OF MY EXPENSE REPORTS WERE REVIEWED THROUGH AN EXTENSIVE APPROVAL PROCESS BY MANAGEMENT AND OTHERS. ANY PERSONAL EXPENSES WERE THEN IDENTIFIED AND DEDUCTED FROM MY MONTHLY PAYCHECK. THIS WAS COMMON PRACTICE WITHIN THE FIRM AND A PROCESS THAT WAS UNDERSTOOD BY MANAGEMENT AND ALL SALES REPRESENTATIVES. MY EXPENSES HAD NEVER COME INTO QUESTION OVER MY SIX YEARS WITH THE COMPANY. THERE WERE SOME EXPENSES, HOWEVER, THAT FIDELITY WAS OF THE OPINION COULD HAVE BEEN VIEWED AS MORE PERSONAL THAN BUSINESS. AS WE EVALUATED THESE EXPENSES AND WE REVIEWED THE DETAILS OF EACH, THEY CONCLUDED THAT SOME OF THE TRANSACTIONS WERE QUESTIONABLE AND ARGUABLY COULD HAVE BEEN PERSONAL OR BUSINESS. THE ASSUMPTION WAS MADE THAT I USED THE CORPORATE CARD FOR PERSONAL USE AND DID NOT INDICATE AND CODE PROPERLY ON MY EXPENSE REPORTS. THEY ASKED THAT I REIMBURSE THE FIRM FOR THESE EXPENSES IN QUESTION. ALTHOUGH I DID NOT CONCUR WITH THIS CONCLUSION, I PAID THIS AMOUNT TO AVOID A PROTRACTED CONTROVERSY OR ANY FURTHER CONFRONTATION. THIS AMOUNT WAS PAID TO FIDELITY IN A VERY TIMELY MANNER AND IN FULL. I ENTERED INTO THIS COMPROMISE SO THAT I COULD CONTINUE WITH MY VOLUNTARY RESIGNATION AND PURSUE MY FUTURE CAREER OUTSIDE OF THE FIRM.
According to a study prepared for the FINRA Investor Education Foundation, 80 percent of American investors report that they have been solicited to participate in a fraud scheme, while 11 percent of American investors report that they personally lost money as a result of fraud.
FINRA notes that the rate of investment fraud is most likely much higher than it is reported. This is because many victims of financial advisor scams are too ashamed to come forward. Further, the study also found that a significant number of investors do not know how to spot common red flags of investment fraud. The least you should do is share your experience with other potential victims of investment scams.
Previous Associations
Under federal securities law and securities industry regulations, registered investment firms have a legal duty to supervise their financial advisors. Section 15(b)(4)(E) of the Securities and Exchange Act of 1934 makes a securities firm liable for the conduct of representatives.
- NFP SECURITIES, INC. (CRD#: 42046) :: 12/19/2011 – 1/22/2014 :: TAMPA, FL
- FIDELITY INVESTMENTS INSTITUTIONAL SERVICES COMPANY, INC. (CRD#: 17507) :: 11/4/2005 – 8/18/2011 :: SMITHFIELD, RI
- PRINCOR FINANCIAL SERVICES CORPORATION (CRD#: 1137) :: 5/7/1999 – 9/29/2005 :: DES MOINES, IA
- JOHN HANCOCK DISTRIBUTORS, INC. (CRD#: 468) :: 5/20/1996 – 7/31/1998 :: BOSTON, MA
- JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY (CRD#: 5181) :: 5/20/1996 – 5/1/1997 :: BOSTON, MA
The duty to supervise securities representatives is a strong legal requirement. Registered investment firms must take many different steps to ensure that they are protecting their customers from irresponsible and criminal financial advisors.
Legit or Not?
Unfortunately, stockbroker fraud is more common than many investors would like to think. And yes, stockbrokers (including Karl Robert Herrmann, but not limited to) can (and do) steal money from their clients. While it’s rare that a broker will literally steal his client’s money (though that does happen), typically the “theft” of investment funds comes in the form of other fraudulent violations of securities law and FINRA rules which leads to significant investment losses.
Sometimes investment losses occur because advisors, stockbrokers, and even brokerage firms, commit fraud. Massimo Vignelli
Investors generally understand that there are risks associated with buying and selling securities. The market can go up, and the market can go down. No matter how skilled of an investor you are, there are always risks. With that being said, sometimes investment losses cannot be blamed on simple back luck.
There are 10 major types of complaints we receive against Investment Brokers –
- Outright Theft (Conversion of Funds)
- Unauthorized Trading
- Misrepresentation or Omission of Material Facts
- Excessive Trading (Churning)
- Lack of Diversification
- Unsuitable Investment Recommendations
- Failure to Disclose a Personal Conflict of Interest
- Front Running of Transactions
- Breakpoint Sale Violations
- Negligent Portfolio Management
Do your due diligence before investing. Public records are available for everybody to review and decide on the safest bet.
How to Protect Yourself
We, as citizens, place a great deal of trust in the financial advisors who are tasked with helping us achieve and maintain financial security. Most of the time financial advisors and stockbrokers are honest folks who work diligently in their client’s best interests. However, on occasion financial advisors and the brokerage firms who employ them mess up and cause serious financial harm to their clients. Sometimes these losses are caused by simple negligence. Other times fraud or other serious misconduct is to blame.
Here are 5 signs that your broker needs to be reported –
- Breach of Fiduciary Duty: Under the Investment Advisers Act of 1940, certain investment professionals, known as registered investment advisors (RIAs), owe fiduciary obligations to their customers. Your investment broker must always look out for your best interests. If you lost money because of your broker’s breach of fiduciary duty, you may be entitled to compensation for the full value of your damages.
- Unsuitable Investments: Many financial advisors are not fiduciaries. Instead, they are held to the suitability standard. These stockbrokers and financial advisors can only sell and recommend financial products that are appropriate for a customer’s unique investment profile. If you lost money in unsuitable investments, you should consider reporting them.
- Material Misrepresentations or Omissions: Brokers have a duty to make fair and honest representations to their clients. If they fail to do so, and an investor loses money due to a misrepresentation or a material omission, the broker may be liable for the investor’s losses.
- Lack of Diversification: Brokers must also act with the appropriate level of professional skill. Pushing a customer into over-concentrated investments is highly risky. Brokers can be held liable for losses sustained because of an investor’s inappropriate lack of diversification.
- Excessive Trading (Churning): Stockbrokers and financial advisors must have a well-grounded, reasonable basis to execute all trades. Unfortunately, there are cases in which brokers will frequently trade on a customer’s account, simply to increase their own fees. This unlawful practice is known as churning.
- Unauthorized Trading: Brokers must have the proper legal authority to make transactions on behalf of a client. If you lost money because your broker made trades that you never approved of, you may have been the victim of unauthorized trading. You should consult with an experienced attorney.
Report Karl Herrmann
In order to prevail in an investment fraud lawsuit or FINRA arbitration cases, you must be able to assert a viable ‘cause of action’.
Karl Robert Herrmann – and the firm that employs this broker – is regulated by the Financial Industry Regulatory Authority (FINRA). FINRA provides an online form to allow investors to file a formal complaint against their financial advisor, stockbroker, or brokerage firm.
Click here to go to FINRA’s Online Complaint Form →
This form will ask you for specific information related to your complaint. Be prepared by gathering the following:
- Name and symbol for the investment product in question.
- The CRD number (2706681) for the broker – Karl Robert Herrmann
- Your complete contact information.
Remember, it is advised to report your broker to FINRA, only after you have exhausted all of your other remedies and carefully prepared a compelling complaint. Once you file a complaint against your broker at FINRA, your case will be bound by FINRA’s rules and the arbitration panel’s eventual decision. The time clock will start, and your complaint will be served on your broker or broker-dealer.