A veteran Twin Cities financial adviser agreed to be permanently barred from the industry, settling a regulatory investigation into allegations he recommended "risky and unsuitable investments in various businesses where his wife was a partial owner."
Paul R. Koch, who most recently worked for a Wayzata-based unit of RBC Capital Markets, formally agreed last week to the sanction by the Financial Industry Regulatory Authority (FINRA) without admitting or denying findings.
An attorney for Koch, Terrence Fleming of Minneapolis, said Koch decided in January to leave RBC and pursue opportunities outside the industry. Fleming spoke to FINRA officials and learned they were seeking a permanent bar.
"He was out of the industry and not planning to return," Fleming said. "He agreed to the bar to put it behind him."
Koch told FINRA in February that he would not cooperate further with the organization's investigation. The final terms of the settlement were signed March 16. In them, Koch agreed that "he may not be associated with an FINRA member in any capacity, including clerical or ministerial functions."
The investigation came after a client alleged in 2019 that Koch recommended investments in businesses partly owned by his wife, including janitorial services, second-hand clothing stores, haircut establishments, housing developments and venture capital enterprises, according to a FINRA record.
The client also alleged Koch and his wife "diverted funds from these outside investments and accounts for their personal gain," the FINRA record showed.
The client sought more than $10 million in damages from UBS Financial Services, where Koch was employed from 2011 to 2018, the period when the disputed recommendations occurred. The client and UBS settled via FINRA arbitration in 2020 for $3.75 million, the authority's record showed.
