National investment firm based in Whiting found in violation of federal guidelines
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Federal regulators are requiring a Whiting-based investment firm to pay over $250,000 in fines and restitution after they found the company didn’t properly supervise its agents and sold unregistered securities.
The firm—American Trust Investment Services Inc.—has a dozen branch location across the country but its headquartered in Whiting, according to the Financial Industry Regulatory Authority (FINRA).
According to an April filing from FINRA, regulators found American Trust violated a series of federal rules from 2020-2021 that left six investors out of $166,000 altogether.
Among the violations, American Trust was accused not acting in its customers’ best interests by encouraging them to invest in risky corporate bond offerings that weren’t suitable for the investors’ portfolios.
“The offering documents for the [bond] offerings, which commenced in June 2020, stated that the bonds could be considered speculative, involved a high degree of risk, were illiquid, and were only suitable for persons with substantial financial resources and with no need for liquidity,” the FINRA document states.
In 2022, the company offering the corporate bonds filed for bankruptcy.
The filing also says the firm offered unregistered securities and failed to reasonably supervise the work of its agents throughout the unsanctioned transactions.
American Trust did not respond to a request for comment from Inside INdiana Business.
As a result of the violations, the FINRA document says American Trust has agreed to pay $166,000 in restitution payments as well as a $100,000 fine. On top of that, American Trust will consent to a third-party audit of the firm’s practices and promises to implement any suggestions the audit recommends.