Holland Sentinel May 15, 2005 (By Patrick Revere)
Three Holland area retirees are filing arbitration claims alleging they lost hundreds of thousands of dollars when a local financial adviser pushed unsuitable investments on them.
Claims on behalf of Wayne Alofs of Holland and Roger Beyer of Zeeland have been sent to the National Association of Securities Dealers for arbitration, attorney Andrew Stoltmann of Chicago said. A third claim, on behalf of Daniel Ash of Zeeland, is being prepared, Stoltmann said.
All the claims are against Paul A. Kuiper, 56, a financial adviser and broker at the Robert W. Baird office at 151 Central Ave. in Holland.
Losses from the three portfolios exceed more than $1.5 million over a period of nine years, the claimants said.
Complaints filed on behalf of Alofs and Beyer allege that Kuiper, who has been at the Baird office for nearly 18 years, loaded the retirees’ portfolios with high-risk technology mutual funds. Some of those funds, the complaints allege, earned Kuiper commissions of up to 5 percent regardless of how well the funds performed.
All the cases, Stoltmann said, involve retirees without much financial acumen.
“I think all of these cases are similar in nature,” he said.
Stoltmann said a retiree’s portfolio should be geared toward their personal needs and desires, and usually made up largely of safer fixed-income investments.
Ash, 67, who retired from Prince Machine after 28 years of work, said he initially invested more than $750,000 with Kuiper in 1996 and pulled out with less than $300,000.
Beyer, 67, who worked at Prince Machine for 25 years, said his portfolio was set up in a similar fashion to his former co-workers. He brought $668,518 to Kuiper in 1999 and at the end of last year pulled out with what remained — $228,000.
Kuiper has refused to comment on the allegations.
Robert Peel, manager of Baird’s Holland office, said he was asked by the firm’s corporate office in Milwaukee to refrain from talking about the case.
“It’s an unusual situation,” he said. “I’ve been managing this office for four years. I know Paul to be a person of high integrity and character, so this (the Alofs complaint) comes as a surprise.”
Peel said the office has a system in place to maintain oversight and suitability of investments for all clients.
“We have a laundry list of NASD and (Securities and Exchange Commission) regulations that I, as manager of the branch, am required to ensure are followed,” he said. “I see every transaction that takes place. We also have an annual audit and have oversight from our regional manager.”
John Rumpf, a spokesman at Baird’s headquarters in Milwaukee, said the 85-year-old firm’s more than 2,000 licensed brokers are required to participate in ongoing education regarding the best way to invest for a variety of clients, including seniors.
“We have policies and procedures in place to help assure our advice is both suitable and atune to helping our clients achieve their financial goals,” he said.
Rumpf said the claims against Baird and Kuiper are the typical consequences of doing business in an overly litigious society. Attorneys for the firm have instructed Rumpf not to speak about the specifics of the claims against Kuiper and the Holland office, he said.
“Right now we’re aware of one arbitration case by one client,” Rumpf said, referring to Alofs. “We intend to defend ourselves vigorously.”
Alofs, 69, retired from Prince Machine in 1998 after 33 years with the company, rolling over about $1.5 million into a Baird account.
“When I pulled out of the investments in February 2003 I had lost about half of what I went in with,” he said.
The Michigan Office of Financial and Insurance Services, which licenses and takes complaints against the state’s brokers, also has received three allegations regarding allegedly unsuitable investment advice in regard to Kuiper, OFIS spokesman Andy Schor said.
Greg Wille, a Milwaukee attorney hired by Baird to represent the firm and Kuiper, said if Kuiper’s clients are victims that they’re only victims of a bad market.
“I’m not sure what Mr. Alofs is saying, but there are a lot of investors who have been disappointed with the performance of the market over the last couple years,” Wille said. “I have been retained to defend the claim and we will defend it vigorously.”
Stoltmann said that while only two of his clients’ claim letters have been filed with the NASD, a dozen more of Kuiper’s clients, all former Prince Machine employees, are meeting with his firm to talk about their cases. In Beyer’s complaint, he states that more than 40 Prince retirees established accounts with Kuiper.
The attorney said the portfolios he has reviewed show that investors were set up with packages that were 90 percent stocks, with at least 50 percent of those being in technology and biotechnology stocks.
Complaints against investment companies are generally handled by arbitration because most client-investor contracts that dictate that disputes be handled outside the court system.