Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Kevin Kane (Kane), previously associated with Cambridge Investment Research, Inc., has at least one disclosable event. These events include one tax lien, alleging that Kane recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on November 20, 2024.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Kevin John Kane (‘Respondent’). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the ‘Offer’) which the Commission has determined to accept. The commission finds that on October 29, 2024, a final judgment was entered by consent against Respondent, permanently enjoining him from future violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (‘Advisers Act’), 15 U.S.C. \\u00a7\\u00a7 80b-6(1) and 80b-6(2) as set forth in the judgment entered in the civil action entitled Securities and Exchange Commission v. Kevin John Kane et al., Civil Action No. 1:23-cv-00371-CCC, in the United States District Court for the Middle District of Pennsylvania. The Complaint alleged Investment Adviser 1 terminated Respondent because he violated its policies and procedures and, following that termination, and in an efforts to convince clients to join Respondent at a new investment advisory firm, Respondent repeatedly defrauded and breached his fiduciary duty to these clients by: (1) falsely telling clients that Respondent voluntarily ended his association with Investment Adviser 1, despite having been terminated for cause; (2) falsely telling clients that he was still associated with Investment Adviser 1 and could continue to effect transactions in their accounts; (3) failing to alert clients of Respondent’s termination and inability to perform transactions in their accounts; and (4) to prevent clients from discovering the truth, impersonating clients in telephone calls with Investment Adviser 1 to effect securities transactions.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of 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 an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail 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 included in 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. Thus, without conducting its own reasonable investigation, a brokerage firm cannot depend solely on the issuer for information about a company.
Another protective measure is to require broker discloses. FINRA requires the broker to disclosure 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 research shows brokers with a past record of regulatory or customer complaint issues are more likely to have such problems again in the future. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. 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.
Kane has been in the securities industry for more than 30 years. Kane has been registered as a Broker with Cambridge Investment Research, Inc. since 2021.
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.
