NYLife Securities Broker Consents to 18-Month Suspension and Fines for Allegedly Engaging in Outside Business Activity without Firm ApprovalWednesday, December 4, 2019
On November 21, 2019, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement approved a Letter of Acceptance, Waiver and Consent (AWC) submitted by David Kendrick, a former registered representative with NYLife Securities LLC in Shreveport, Louisiana.
According to his FINRA BrokerCheck report, Kendrick was registered as a general securities representative at NYLife Securities from May 2002 to May 2018. Shortly after receiving his Form U5 from the firm, which stated that Kendrick was permitted to resign for “failing to disclose his participation in an investment club and other unapproved outside business activities, including investments in private placements,” FINRA Department of Enforcement launched an investigation into these allegations.
FINRA alleges in the AWC that from June 2010 to May 2018, Kendrick participated in nine private securities transactions without seeking or obtaining approval from NYLife Securities. Specifically, Kendrick and eight other individuals formed an investment club in which Kendrick was designated as manager and agent and was provided the authority to manage and control the clubs’ affairs, including writing checks, authorizing wires and communicating with the other member investors, among other things. Shortly thereafter, Kendrick and his business partners opened a second investment vehicle to facilitate one of the investments. Kendrick solicited $290,000 in investments to five NYLife customers who were also members of these investment clubs and received equity interest in the form of membership units, shares and/or warrants. Kendrick also personally invested $106,297 in six different private placements.
FINRA asserts that Kendrick did not divulge his participation in the investment club when he first requested approval from NYLife to allow the investment club as an outside business activity. He also did not divulge to NYLife that he had personally invested and facilitated the investment and allegedly made false statements on six annual compliance questionnaires and five branch audit questionnaires concerning his outside business activity.
Based on the foregoing, David Kendrick violated NASD Rule 3040 and FINRA Rules 3280 and 2010. To resolve these allegations, Kendrick consented to an eighteen-month suspension and a $30,000 fine.
Oftentimes brokerage firms can be held liable for the brokers’ misconduct if they failed to supervise them while registered at the firm. If you lost money through a broker and you suspect wrongdoing, you may be able to recover from your broker or the brokerage firm where he or she was registered. Since 1998, the experienced attorneys at ChapmanAlbin LLC have been fighting for victims of investment fraud and broker misconduct. Call us today at 1-877-410-8172 for a free consultation.