According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Li Kelly (Kelly), previously associated with HSBC Securities (USA) Inc., has at least one disclosable event. These events include one customer complaint, alleging that Kelly recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $100,000.00 on December 23, 2024.
Claims loss due to corporate bond investment in which issuer declared bankruptcy, claiming breach of contract, breach of fiduciary duty, vicarious liability. Investments were made in 2019-2020.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. The SEC has also implemented “Regulation Best Interest (Reg BI)“, which strengthens the brokerdealer standard of conduct beyond existing suitability obligations, making it mandatory for brokerdealers to act in a retail customer’s best interest when recommending any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have a duty to gather and review sufficient information about a retail investor to ensure their account recommendations are reasonably in the investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. The cost of the recommendation and information about the investor are always part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, a brokerage firm should not depend solely on information from the issuer regarding a company but must perform its own thorough investigation.
Additional investor safeguards include broker disclosure requirements. Brokers are required by FINRA to reveal the events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on their public BrokerCheck reports. FINRA has recognized that recent studies offer evidence showing that brokers with a past record of regulatory and customer complaint issues are more likely to have such issues in the future. FINRA’s Office of the Chief Economist (OCE) published a study showing that previous disciplinary and disclosure events can predict the probability of future occurrences. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Kelly has been in the securities industry for more than 5 years. Kelly has been registered as a Broker with HSBC Securities (USA) Inc. since 2023.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.