Grosse Pointe Farms Registered Representatives Face Numerous Allegations of Securities Violations including Falsifying Documents, Fraud, and Concealing Statutory Disqualification from ClientsTuesday, May 14, 2019
The Financial Industry Regulatory Authority (FINRA) Department of Enforcement recently filed a complaint against former registered representatives Kim Kopacka (a/k/a Kim Kahala Hashimoto) and Beth DeBouvre (a/k/a Beth Bunnell).
Ms. Kopacka and Ms. DeBouvre were associated with IMS Securities, Inc. in Grosse Pointe Farms, Michigan since November 2003 until the firm was expelled in March 2017. According to their FINRA BrokerCheck reports, both representatives have had multiple customer disputes, with several still pending. These disputes allege misrepresentation, breach of fiduciary duty, negligence, unsuitable recommendations, and fraud, among other things.
According to the complaint, Kim Kopacka and Beth DeBouvre enabled Kim’s husband, Timothy Kopacka, to associate with and conduct securities business through member firms and engage in activities requiring registration despite the fact that he was barred from associating with member firms.
Mr. Kopacka was associated with First Financial from November 1996 through December 1998 and owned “Grosse Point Financial, Inc.,” a securities and insurance business from an office located in Grosse Pointe Farms, Michigan. In December 1998, the NASD (now FINRA) accepted a Letter of Acceptance, Waiver and Consent in which Mr. Kopacka consented to pay a $340,289 fine and agreed to a bar from association with any NASD member based on allegations that he had engaged in private securities transactions without providing the required notice or receiving written approvals.
Ms. Kopacka became associated with First Financial one month before her husband was barred by NASD and conducted securities business under the name “Grosse Pointe Financial Services” out of her husband’s office. By working under similar names out of the same Grosse Pointe office, the Kopackas made it appear to Mr. Kopacka’s customers that his securities business continued unchanged.
FINRA alleges that with the help of Ms. Kopacka and Ms. DeBouvre, Mr. Kopacka continued to meet with new and existing firm customers and allowed Mr. Kopacka to recommend the purchase and sales of securities to firm customers. To circumvent his bar, Mr. Kopacka recommended and sold securities through First Financial, using new account forms that listed the branch manager as the registered representative responsible for the transactions.
Ms. Kopacka approached Ms. DeBouvre in September 2001 to join First Financial and became her supervisor and manager at the Grosse Pointe Office. FINRA alleges that upon joining the office, DeBouvre knew that Mr. Kopacka had been barred and was still conducting securities business. She then contributed by preparing documents that Ms. Kopacka signed and then approved the accounts and transactions recommended by Mr. Kopacka on behalf of First Financial.
When Ms. Kopacka and Ms. DeBouvre switched from First Financial to IMS Securities, nothing changed with their securities business. IMS paid Ms. Kopacka 92 percent of the gross commissions generated on transactions for which she was the designated representative. In turn, Ms. Kopacka paid Ms. DeBouvre for serving as the branch manager and supervisor.
Ms. Kopacka and Ms. DeBouvre circumvented Mr. Kopacka’s statutory disqualification by falsifying documents supporting the transactions he recommended, approving transactions, and concealing his statutory disqualification from clients. In 2003, when Mr. Kopacka became one of the principals and founders of United Development Fund (UDF), a residential real estate finance company, Ms. Kopacka and Ms. DeBouvre facilitated transactions through IMS that resulted in securities transactions of over $40 million and commissions of more than $6 million.
In July 2018, the U.S. Securities and Exchange Commission (SEC) charged United Development Fund III and IV and four executives with misleading investors by failing to disclose that United Development Funding III was unable to pay distributions and were using money from a new fund, United Development Funding IV, to pay distributions to investors in the older fund. During the SEC’s and FINRA’s investigation, Ms. Kopacka and Ms. DeBouvre attempted to dissuade customers from cooperating with the investigation of their misconduct.
Based on the foregoing, Ms. Kopacka and Ms. DeBouvre violated FINRA Rules 8311 and 2010 and NASD Rules 2110 and 1031. FINRA Department of Enforcement is requesting relief to make findings of fact and conclusions of law that Kim Kopacka and Beth DeBouvre committed the violations alleged in the complaint and order that sanctions and fines be imposed under FINRA Rule 8310(a) and 8330.
If a broker was not properly supervised while registered at a brokerage firm, the firm can be held liable for the broker’s misconduct. Did your broker’s bad advice you money? You may be able to recover from your broker or his or her brokerage firm. Since 1998, we have been representing victims of investment fraud and broker misconduct. Call us (1-877-410-8172) today for a free, no obligation consultation.