FINRA Affirms Bar Of PKS’ Gopi Krishna Vungarala For Fraud

Gopi Krishna Vungarala (CRD#: 4856193, Midland, Michigan) has been a registered representative of Purshe Kaplan Sterling Investments from December 13, 2007 to February 21, 2017. Financial Industry Regulatory Authority (“FINRA”) National Adjudicatory Council has issued a Decision #2014042291901 on October 2, 2018 which affirms FINRA’s Extended Hearing Panel’s barring of Vungarala from acting as a broker or associating with FINRA member broker-dealer firms. FINRA’s National Adjudicatory Council affirmed findings that Vungarala defrauded a Native American Tribe.

FINRA Found Gopi Krishna Vungarala Comitted Fraud

Vungarala was a Purshe Kaplan Sterling Investments registered representative and a full-time employee of the Tribe. The National Adjudicatory Council Decision stated that a Native American Tribe enlisted Vungarala to manage the Tribe’s investments and make investment recommendations for the Tribe. The Tribe depended on Vungarala to provide the Tribe with objective investment recommendations.
While working for the Tribe, Vungarala fraudulently misrepresented and omitted facts about commissions he was earning from Purshe Kaplan Sterling Investment. The misrepresentations and omissions concerned his activities pertaining to the Tribe’s investment account transactions.
The findings show that Vungarala led the Tribe to believe, on a number of occasions, that he was not being paid commissions on the Tribe’s investment transactions. The Tribe apparently invested in non-traded real estate investment trusts (commonly referred to as “REITs”) and business development companies (commonly referred to as “BDCs”). The Tribe invested $190,000,000.00 through Vungarala.

Vungarala Falsely Represents No Conflicts Of Interest

Vungarala evidently represented that working for both the Tribe and Purshe Kaplan Sterling Investments did not present conflicts of interest. Yet, Vungarala lied to the Tribe, omitting that he earned $9,600,000.00 in commissions on the Tribe’s BDC and REIT transactions.
The Hearing Panel also found Vungarala made false representations and omissions to the Tribe in connection with their investment costs. Specifically, Vungarala did not explain to the Tribe that it could receive more than $3,300,000.00 in discounts by making bulk purchases of BDCs and REITS. As a result of those misrepresentations and non-disclosures, Vungarala benefited financially. According to the Decision, had those discounts been applied, the commissions paid by the Tribe would have been $2,800,000.00 less.
Therefore, the National Adjudicatory Council affirmed the Hearing Panel’s imposition of two bars against Vungarala for his willful misconduct. The first bar came as a result of Vungarala defrauding the customers about the commissions that he earned in connection with the Tribe’s BDC and REIT investments. The second bar imposed by the Hearing Panel came from Vungarala’s failure to inform the Tribe about the volume discounts.

FINRA Finds Gopi Krishna Vungarala A Threat To Investors

The National Adjudicatory Council stated that Vungarala took no responsibility for having caused financial harm to the Tribe.  The National Adjudicatory Council further stated that Vungarala was not fit to remain in the securities industry; barring Vungarala was necessary for the protection of the investors.

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