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The law firm of Oakes & Fosher is presently investigating the possible misconduct of former securities broker Fredrick Randhahn. According to his publicly available FINRA BrokerCheck report, Fredrick Randhahn has been the subject of a customer dispute.

Fredrick Randhahn was a Utah based securities broker. He worked in the securities industry for thirty-two years. During his career, he was registered with six different securities firms. He is no longer working as a registered securities broker in any fashion.

His Registrations

  • Pruco Securities Corporation (1985-1988)
  • Cigna Financial Advisors (1987-1994)
  • FIS Securities (1995-1996)
  • Merrill Lynch (1996-2009)
  • Ameriprise Advisor Services (2009-2012)
  • Sigma Financial Corporation (2012-2018)

The Allegations

Fredrick Randhahn was officially sanctioned by FINRA in November 2019. The findings in this matter state that he solicited investors to purchase promissory notes without member firm authorization. These promissory notes were for a non-traded real estate investment fund. Fredrick Randhahn allegedly sold $625,000 of promissory notes to multiple investors–two of which were member firm customers. For his part in this, Fredrick Randhahn received over $33,000 in commissions. The non-traded REIT eventually filed for bankruptcy and defaulted on the notes. Due to his alleged actions, Fredrick Randhahn was fined $5,000, forced to repay the $33,000 in ill-gotten commissions, and was suspended from acting as a securities broker in any fashion for a period of nine months. Randhahn was terminated from his position at Sigma Financial Corporation in August 2018 due to the allegations. One customer has an open case against Sigma due to these allegations. They are seeking $400,000 in damages due to the alleged actions of Fredrick Randhahn.

What Does This Mean?

Promissory notes are contracts in which one party “promises” a certain amount to be returned to the other party in exchange for providing them with a loan. These notes differ from purchasing equity as their stated value does not fluctuate based on how the investment is doing. Some less than scrupulous securities brokers will misrepresent these notes as safe investments by highlighting the differences between purchasing them and purchasing equity. However, nothing could actually be further from the truth. The truth is that promissory notes are actually incredibly risky investments. They are usually only offered by private companies looking to expand in some way. These private companies are usually incredibly speculative and would be highly unsuitable equity investments for individuals with more conservative objectives. While promissory note holders may assume these speculative companies are liable to pay them back no matter what, nothing can be done if these companies fail.

Everything described above are legitimate promissory notes. Promissory notes can also be used as fronts for fraudulent investment schemes. Individual brokers, or companies, looking to convert investor funds may issue fraudulent promissory notes for real or fictitious companies with no actual intention of paying them back. Instead the solicited funds are diverted elsewhere for other purposes. In order to make interest payments to these note holders, these brokers, or companies, often must sell fraudulent notes to more investors in a Ponzi scheme manner until such time that the entire thing collapses.

Oakes & Fosher Can Help

Many investors are unaware of the legal recourse available to them after losing money due to securities broker fraud and/or negligence. The truth is that investors who have lost money in this fashion may actually be entitled to damages. Oakes & Fosher dedicates its entire legal practice to helping investors across the nation. If you, or someone you know, have lost money investing with Fredrick Randhahn, please contact Oakes & Fosher for a free and private consultation. Oakes & Fosher handles cases on a contingency basis, which means there are no fees charged unless we collect for you.