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Scott Niekamp Suspended By FINRA Following Allegations of Unapproved Outside Business Activities

Jul 14, 2021 AWC

Scott Niekamp (CRD #: 3277810), a broker registered with Northwestern Mutual Investment Services, has been suspended by FINRA, according to his BrokerCheck record, accessed on July 7, 2021. This regulatory action followed allegations that Niekamp had been involved in outside business activities. Missouri has also suspended Scott Niekamp as of September 1, 2021. 

On August 2, 2021, the Enforcement Section of the Missouri Securities Division found it to be in the public's best interest to fine Scott Niekamp $2,500 and suspend his registration for three months. 

Scott Niekamp’s Outside Business Activities

FINRA requires that brokers provide written notice to their firms regarding their outside business activities. According to his detailed BrokerCheck record, Niekamp is involved in the following outside businesses:

  1. Scott Niekamp may earn commissions from insurance companies not affiliated with Northwestern Mutual for sales of non-variable life and health insurance. He may also earn commissions on annuities and/or disability income insurance products.
  2. He is the 100% owner of Niekamp Group, LLC.

Summary of Violative Conduct

According to FINRA, Scott Niekamp failed to provide written notice regarding two outside business activities and violated FINRA rules when he made two loans totaling $450,000 without notifying his firm. Brokers can only loan money to investors if their loan falls under one of FINRA’s approved categories. Even then, they still must receive permission from their firm.

On June 9, 2021, Scott Niekamp entered into an Acceptance, Waiver, and Consent agreement (AWC) with FINRA in which he consented to the following findings:

1. Commons Development Company and Urban Prairie Development: In 2011, Northwestern Mutual Investment Services (NMIS) approved Scott Niekamp’s request to invest and participate in an outside business called Commons Development Company, which develops senior living facilities. Niekamp allegedly told NMIS that, as a passive investor, his activities would be limited. In 2014, Niekamp updated the firm to let them know he was no longer involved with Commons Development Company.

FINRA alleges that from 2011 to 2017, Scott Niekamp’s role in Commons Development Company was broader than he disclosed. He allegedly reviewed and edited pitch materials for potential investors, hired and paid print vendors, contributed capital towards a possible real estate purchase, and met with potential partners for future projects. Niekamp was also allegedly involved in negotiations for a possible land purchase through Urban Prairie Development, a D.B.A. of Commons Development Company.

2. Keystone Technologies: In 2011, Scott Niekamp allegedly received a 2% ownership interest in Keystone Technologies. Keystone Technologies partnered with Commons Development Company on several potential projects. Niekamp allegedly assisted Keystone in its attempts to secure financing by facilitating meetings with a local bank.

Scott Niekamp allegedly did not disclose any of his work with Keystone or Urban Prairie until 2018. Niekamp allegedly made false statements regarding his outside business activities on six compliance questionnaires.

3. Loans to Investors: NMIS rules prohibit registered brokers from lending money to firm customers unless they are immediate family members. In 2015, an investor allegedly approached Scott Niekamp about a loan to assist in covering payroll taxes for his business. In total, Niekamp allegedly lent this investor $450,000 without seeking his firm’s permission. He also allegedly stated in a questionnaire that he had not loaned money to a firm customer.

FINRA Suspension and Fine

As part of the AWC agreement, Scott Niekamp consented to a fine of $10,000 and a three-month suspension.

You can read a copy of the AWC here.

Investor Disputes Regarding Private Equity Securities in Outside Businesses

There is a pending dispute that alleges Scott Niekamp solicited investments in a private equity company without disclosing his shareholder status. On February 22, 2018, an investor alleged that Scott Niekamp failed to disclose material facts about a private equity security and made false representations that caused the investor to lose money. They further alleged that Niekamp engaged in a civil conspiracy.

The investor is seeking $5,000,0000; the dispute is pending.

Scott Niekamp has a similar settled dispute on his record. On February 12, 2018, an investor alleged that Niekamp recommended she invest in a private equity security but failed to disclose material facts concerning the investment, including the fact that Scott Niekamp himself was a shareholder in the business. The investor further alleges that Niekamp made assurances regarding the investment’s performance that caused her to lose money. The investor sought $500,000; the dispute settled for $425,600.

Scott Niekamp Background Information

Niekamp has passed the following exams:

  • Series 66 Uniform Combined State Law Examination
  • Series 63 Uniform Securities Agent State Law Examination
  • Securities Industry Essentials Examination
  • Series 7 General Securities Representative Examination
  • Series 6 Investment Company Products/Variable Contracts Representative Examination

He is a registered broker in 17 states and a registered investment adviser in Missouri.

During his 21 years of experience, Scott Niekamp has only worked for the following firm: Northwestern Mutual Investment Services (CRD #: 2881)

What Should I Do If I Invested In One of Scott Niekamp’s Outside Businesses?

If you worked with Scott Niekamp and he recommended that you invest in Keystone Technologies, Urban Prairie Development, or Commons Development Company, you should contact a securities lawyer today. Call 212-658-1502 or email jkurta@kurtalawfirm.com.