HD Vest Stockbroker Sanctioned For Unauthorized Trading
Frank H. Kelly of New Cumberland Pennsylvania a stockbroker formerly employed by HD Vest investment Services has been fined $5,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon Kelly’s consent to findings that (1) Kelly exercised discretion in customer accounts without obtaining written authorization and (2) Kelly placed trades in a customer’s account without the customer having provided authorization to Kelly. Letter of Acceptance Waiver and Consent No. 2016051149101 (May 30, 2019).
According to the AWC, between 2011 and 2016, during the time Kelly was associated with HD Vest investment Services, Kelly executed transactions in customer accounts on a discretionary basis. Supposedly, no written authorization was provided from the customers which allowed for Kelly to exercise discretion in their accounts. Moreover, Kelly’s exercise of discretion was disallowed by the firm – the firm’s policies prohibited stockbrokers from effecting trades unless explicit instructions had been provided to the stockbroker from the customers.
FINRA also revealed that customers’ positions had been liquidated by Kelly in amounts which significantly exceeded the amounts that customers requested. Further, Kelly was administered compliance questionnaires by HD Vest investment Services which called upon Kelly to disclose whether he engaged in discretionary trading. Kelly reportedly falsified his responses in the questionnaires administered to him regarding his activities from 2011 to 2016. FINRA found Kelly’s exercise of discretion to be violative of FINRA Rules 2010 and NASD Rule 2510(b).
The AWC also stated that on July 27, 2016, Kelly was made aware that there was a potential sale of investments scheduled to be effected from customer EG’s account to cover EG’s personal expenses. The AWC stated that EG had never confirmed with Kelly that the sale was to be executed from the customer’s account. Evidently, without having procured EG’s consent, a transaction was set in motion by Kelly for more than one thousand mutual fund shares to be sold from EG’s account. The AWC stated that the customer voiced a complaint concerning Kelly’s activities. FINRA found Kelly’s conduct violative of FINRA Rule 2010.
FINRA Public Disclosure confirms that Kelly is referenced in four customer initiated investment related disputes pertaining to accusations of his violative conduct while Kelly was associated with HD Vest Investment Services. Specifically, on December 9, 2005, a customer initiated investment related complaint concerning Kelly’s activities was resolved for $50,000.00 in damages based upon allegations that the customer was placed into mutual fund investments that were inappropriate for the customer causing the customer to suffer losses. Then, a customer initiated investment related arbitration claim involving Kelly’s conduct was settled for $99,000.00 in damages supported by accusations of unsuitable variable annuity products having been sold to the customer by Kelly. National Association of Securities Dealers (NASD) Arbitration No. 05-04378 (Sept. 19, 2016).
Then, on December 5, 2017, a customer initiated investment related complaint regarding Kelly’s activities was settled to resolve allegations that Kelly neglected to apprise the customer about the outstanding margin balance in reference to the customer’s account as well as the interest required to be paid on margin. Moreover, on April 9, 2019, a customer filed an investment related arbitration claim regarding Kelly’s activities where the customer sought damages estimated to exceed $5,000.00 founded on accusations that the customer was provided bad investment advice and placed into annuity products that failed to be suitable for the customer.
Kelly has been registered with HD Vest Investment Services since November 2, 1995.