← Broker database 2023-07-12
Luke Michael Johnson Accused of Unsuitable Alternative Investment Recommendations and Falsifying Documents
According to FINRA, Luke Michael Johnson was named in a complaint alleging that he made unsuitable recommendations to customers to purchase more than $2.35 million in illiquid alternative investments.
The complaint alleges that Johnson's recommendations to customers to purchase illiquid alternative investments were unsuitable in light of the customers' investment profiles—including their net worth, liquid net worth, annual income, investment objectives, risk tolerance, and, for senior customers, their ages. Johnson's recommendations also allegedly over-concentrated the customers' liquid net worth in illiquid and high-risk securities. Johnson allegedly earned more than $132,900 in commissions from these recommendations.
The complaint also alleges that Johnson, or his assistants acting at his direction, falsified customers' reported net worth and liquid net worth on his member firm's customer account information forms and the customers' alternative investment documents, compared to the customers' actual net worth and liquid net worth. Johnson or his assistants allegedly also often falsified customers' reported risk tolerance, liquidity needs, annual income, and/or their status as an accredited investor.
While Johnson was associated with the firm, it had a policy that limited customers from investing more than 35% of their liquid net worth in alternative investments. Johnson allegedly dramatically inflated customers' net worth and liquid net worth and dramatically understated the percentage of customers' assets invested in alternative investments in order to circumvent the firm's concentration policy and its supervisory oversight.
This is an unadjudicated complaint, and Johnson has not been found guilty of these allegations. However, the allegations, if true, would represent serious misconduct involving unsuitable recommendations and document falsification. Investors should carefully review account opening documents and alternative investment subscription agreements to ensure their financial information is accurately stated.