FINRA Sanctions Kestra Stockbroker For Outside Activities
Michael Thomas Lee of Darien Connecticut a stockbroker formerly registered with Kestra Investment Services LLC has been fined $12,500.00 and suspended for one year from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by findings that (1) Lee participated in the Origin Fund as an outside business activity without disclosing this information to the securities broker dealer and (2) Lee provided prospective investors inaccurate information pertaining to the Origin Fund. Letter of Acceptance Waiver and Consent No. 2016051985602 (July 26, 2019).
According to the AWC, Lee was required to abide by the supervisory procedures implemented by Kestra Investment Services in regard to outside business activities. Those procedures reportedly called for the stockbroker to seek permission from the firm, and obtain the firm’s permission, prior to partaking in any activities outside the scope of the stockbroker’s employment. Moreover, Lee had been specifically prohibited from engaging in outside business activities involving capital raising efforts.
The AWC referenced an outside business activity which Lee engaged in concerning a prospective exchange traded fund, Origin Fund. Evidently, prospective investors were solicited by Lee for investments in the Origin Fund, and during that time, materials and other information in regard to Origin Fund had been distributed to them. Evidently, the materials prospective investors received contained false information concerning the Fund specifically concerning the assets Origin held under management as a hybrid investment advisor, and the affiliates of Origin serving as a sponsor and administrator.
Evidently, Lee also falsified information concerning his activities when completing his questionnaire for the firm in regard to his outside business activities. Apparently, none of Lee’s activities concerning Origin Fund were disclosed to Kestra Investment Services contrary to the firm’s protocol. FINRA found Lee’s undisclosed outside business activities and distribution of false investment information to be violative of FINRA Rules 2010 and 3270.