State suspends registrations of Bentonville investment firm
by June 25, 2020 4:11 pm 3,838 views
The Arkansas Securities Commission, a division of the Department of Commerce, on Thursday (June 25) suspended the registrations of Bentonville investment adviser Adam Kuettel.
Kuettel is the founder and majority owner of Kuettel Capital LLC. The suspension means the firm can no longer conduct business in Arkansas.
Arkansas Securities Commissioner Eric P. Munson issued the order, which says the punishment is related to Kuettel’s business practices. According to a Commerce Department news release, Kuettel publicly indicated that the firm would research each client’s unique circumstances and custom-tailor investment advice based on several factors. However, Munson’s order found that Kuettel gave all clients the same advice. Kuettel persuaded most clients to give him discretionary authority, which allowed him to make trades in client accounts without conferring with clients.
According to the release, Kuettel changed the risk tolerances and goals on several client forms to make them open to more aggressive strategies and riskier investments. Kuettel forged client signatures on forms of brokerage accounts so high-risk strategies would be permitted. After indicating that Kuettel Capital would not consider investing in penny stocks, Kuettel invested significant amounts of clients’ money in those products. Investments in penny stock — companies with stock priced under $10 per share that are minimally capitalized and often subject to volatile trading patterns — are considered high-risk investments. Many clients incurred significant losses on penny stocks purchased by Kuettel in their accounts, according to the release.
Kuettel also placed client funds in leveraged and inverse exchange traded funds (ETFs), and exchange traded notes (ETNs). Leveraged ETFs and ETNs purport to deliver returns of a multiple, such as two or three times the return of the underlying index to which the fund is tied. Although prospectuses of these securities clearly state they are designed for sophisticated investors to use as hedges and are to be held for only one day, Kuettel invested many of his clients in these securities and left them holding those positions for months, resulting in significant losses.
Kuettel Capital was incorporated in August 2012, according to state records.
The Arkansas Securities Department regulates the sale of securities, securities brokerage firms and their agents, state-registered investment advisers and their representatives, mortgage loan companies and their loan officers, money services companies and state-chartered credit unions and savings & loans.