churning

A long-time investment advisor with Cantella & Co. based in Owensboro, Kentucky was recently suspended by FINRA for alleged wrongful conduct. Pursuant to FINRA Rule 9216, Gleason submitted a Letter of Acceptance, Waiver, and Consent (AWC) aimed at settling alleged violations and avoiding future repercussions from FINRA based on the same findings.

Gleason’s career spanned several decades, commencing in 1985 when he first registered with FINRA. However, recent disclosures by former employers have brought his practices under scrutiny by FINRA. According to his FINRA Brokercheck report, his association with Cantella & Co., Inc., ended with him being “discharged” due to “Concerns regarding the origin of notations added to firm-requested Active Account and Concentration client letters.”

The AWC focused on Gleason’s actions between July 2020 and June 2021, during which he allegedly breached the Best Interest Obligation under Rule 15l-1(a)(1) of the Securities Exchange Act. This rule mandates that brokers prioritize clients’ interests over their own when recommending investments. According to the AWC: “Gleason recommended to a retail customer (Customer A) a series of transactions that were excessive in light of the customer’s investment profile. In so doing, Gleason placed his interests ahead of the interests of the customer.” The AWC further stated that this pattern of behavior resulted in significant costs for Customer A, including substantial commissions despite modest account balances.

The Financial Industry Regulatory Authority (FINRA) recently issued a disciplinary order against Christopher Booth Kennedy, a former registered representative with Western International Securities, for a series of egregious violations. The order which can be found here, stemming from a complaint filed by FINRA’s Department of Enforcement, outlines Kennedy’s misconduct between July 2020 and July 2021. During this period, Kennedy engaged in churning and excessive trading in the accounts of six customers, resulting in significant financial losses. The Order bars Kennedy from associating with a FINRA firm.

Kennedy’s actions, as detailed in the findings and conclusions of the order, paint a troubling picture of misconduct and deceit. He directed over 5,300 trades totaling more than $350 million in the accounts of six customers, with an average of 102 trades per account each month. These excessive transactions generated substantial commissions for Kennedy while causing substantial losses for his clients. Moreover, Kennedy went to lengths to conceal the true extent of these losses by fabricating account statements and providing false information to his clients.

The disciplinary order found Kennedy in violation of several securities regulations, including Section 10(b) of the Securities Exchange Act of 1934, Regulation Best Interest, and various FINRA rules.

Articles Tagged with churning

Owensboro, Kentucky Financial Advisor suspended by FINRA

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