FINRA Reportedly Suspends Kevin McCallum for Allegations of Unsuitable Investment Recommendations

According to the Financial Industry Regulatory Authority (FINRA), the regulator has reportedly suspended former LPL Financial advisor Kevin McCallum (CRD#: 2222586) for one year and reportedly ordered him to pay a fine of $25,000.00, disgorgement of $14,231.61 and restitution of $1,222,092.29.

FINRA reportedly found that McCallum allegedly made unsuitable recommendations to 12 customers, resulting in their overconcentration in a high-risk, publicly-traded business development company (BDC). According to his broker record, McCallum reportedly has five customer lawsuits filed against him, three of which allege unsuitable investments in business development company Medley Capital Corporation (MCC).

According to FINRA, the BDC that McCallum allegedly recommended held first and second lien secured loans, unsecured loans, and equity in small and medium-sized companies in a variety of industries, including construction, banking, telecommunications, pharmaceutical, and oil and gas companies. The risk of loss for investments in this BDC was purportedly magnified because it borrowed money.

Further, the illiquidity of the BDC’s investments allegedly presented a risk that it would be difficult for the BDC to sell such investments if required, causing it to realize significantly less than the value at which the BDC recorded the investments. The BDC was also reportedly exposed to interest rate risk that could affect its investment returns. 

FINRA alleged that McCallum’s recommendations resulted in the 12 customers concentrating as much as approximately 17% to over 60% in their liquid net worth in the BDC. Four of the customers were reportedly over the age of 60 and seven of the customers invested retirement funds in the BDC, according to FINRA. 

McCallum reportedly sent emails and made statements to customers about the BDC that contained “unwarranted and exaggerated claims, opinions and forecasts, did not provide a fair and balanced treatment of the risks and benefits of the investment, and contained promissory statements,” according to FINRA. 

While McCallum purportedly received $14,231.61 in commissions for the BDC sales, four customers allegedly sold their positions and realized losses totaling $1,222,092.29.

Kevin McCallum was reportedly affiliated with the following firms during his career in the securities industry:

 05/24/2012 – 07/05/2019, LPL FINANCIAL LLC (CRD#:6413), BIRMINGHAM, AL

10/30/2009 – 05/23/2012, NBC SECURITIES, INC, (CRD#:17870), BIRMINGHAM, AL

04/09/2007 – 11/06/2009, COLONIAL BROKERAGE, INC. (CRD#:111668), BIRMINGHAM, AL

05/11/1993 – 03/05/2007, AMSOUTH INVESTMENT SERVICES, INC. (CRD#:15692), BIRMINGHAM, AL

Potential Lawsuits to Recover Financial Losses

The White Law Group is investigating potential securities claims involving Kevin McCallum and the liability his employers may have for failure to properly supervise his activities.

When brokers abuse client accounts or conduct transactions that violate securities laws, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

If you suffered losses investing with Kevin McCallum, the attorneys at The White Law Group may be able to help you by filing a FINRA Arbitration claim against his former employers. For a free consultation, with a securities attorney please call (888) 637-5510.

The foregoing information, which is all publicly available, is being provided by The White Law Group.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois. Please visit www.whitesecuritieslaw.com for more information on the firm and its investigations.