FINRA Sanctions Cape Securities Stockbroker For Churning Elder Customer’s Account
Kevin Kimball Meadows of Columbus Georgia a stockbroker formerly employed by Cape Securities Inc. has been suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that Meadows executed unsuitable and excessively traded or churned the account of an elderly Cape Securities customer. Letter of Acceptance Waiver and Consent No. 2018057846301 (Jan. 28, 2020).
According to the AWC, one of the customers whose accounts Meadows serviced included a retired individual who had a net worth exceeding $500,000.00, and a liquid net worth and annual income each ranging between $100,000.00 and $500,000.00. Meadows was provided documentation which revealed that the customer’s objective was capital appreciation and that the customer had an aggressive tolerance for risk, but FINRA was made aware from the customer that the paperwork overstated his risk tolerance.
FINRA stated that the first account contained a cost-to-equity ratio of fifty-three percent, a turnover rate of 10.10, and $38,621.00 in ticket charges, fees and commissions. The AWC indicated that $28,140.00 in losses were sustained in this account. The second account owned by the customer contained a cost-to-equity ratio of forty-four percent , a turnover rate of 7.93 and ticket charges, fees and commissions of $12,767.00. The customer lost $5,454.00 in this account. FINRA stated that the third account had a cost-to-equity ratio of thirty-seven percent and turnover rate of 6.93, costs totaling $10,876.00 and losses of $6,077.00.
Trades were directed and controlled by Meadows in the customer’s accounts. The majority of those trades had been recommended by the stockbroker. But his trades failed to be suitable and were actually excessive given the customer’s objective for investing and overall circumstances. FINRA determined that Meadows’s conduct was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure confirms that Meadows has been identified in four customer initiated investment related disputes concerning accusations of his violative conduct during the time that the stockbroker was employed by UBS Financial Services and JC Bradford Co. LLC. In particular, a customer initiated investment related complaint concerning Meadows’s activities was settled to resolve accusations that fiduciary duties which were owed to the customer had been breached in regard to the stockbroker’s recommendations of over the counter equities for the customer’s account during the time that he was employed by JC Bradford.
Meadows has been referenced in another customer initiated investment related complaint in which the customer requested unspecified damages supported by allegations that when Meadows was employed by UBS Financial Services, the customer’s over the counter equities portfolio had been churned by the stockbroker. Another customer filed an investment related complaint pertaining to Meadows’s conduct in which the customer requested unspecified damages supported by allegations of the stockbroker stealing from the customer’s mother.
Meadows is also the subject of a customer initiated investment related arbitration claim which was resolved for $50,000.00 in damages based upon allegations that margin was inappropriately utilized for the customer’s account, and stock trades were effected without the customer’s knowledge or consent during the time that Meadows was associated with UBS Financial Services.
Meadows’s registration with Cape Securities Inc. has been terminated as of December 31, 2017. Since May 17, 2018, he has been registered with IBN Financial Services Inc.