The White Law Group is investigating potential securities claims involving Kestra Investment Services (CRD# 42046, Austin, Texas)
Kestra Investment Services LLC is a national financial advisory firm headquartered in Austin, Texas. According to its FINRA Broker Report, the firm reportedly has 16 disclosure events on its broker record including 14 regulatory events, and 2 arbitrations.
July 2020 – Customers file suit against former Kestra Advisor James B. Daughtry Alleging Fraud
Six seniors reportedly filed a lawsuit in Houston County, Alabama alleging their financial advisor, James Blake Daughtry stole more than $1 million from their retirement accounts by purportedly copying and pasting their signatures on documents, according to AL news.
The lawsuit claims that Daughtry and two alleged co-conspirators purportedly stole the retirees’ entire life savings by transferring the retirement accounts to “sham entities” allegedly controlled by the defendants.
The lawsuit further alleges that Kestra Investment Services, a broker-dealer whom Daughtry was registered with, and Equity Trust and ETC were negligent for not preventing the fraud.
According to his BrokerCheck profile, Daughtry was reportedly registered with Kestra Investment Services from 2015 – 2020 when he was discharged after FINRA reportedly barred him for allegations of “potentially fraudulent and unauthorized transactions in customers’ accounts.”
April 2020 – FINRA Censures and Fines Kestra Investment Services $125,000
According to FINRA, from approximately November 2017 until February 2019, Kestra caused certain recruited registered representatives to take nonpublic personal customer information from the firms where the representatives were then registered and to disclose it to a third-party vendor that assisted the representatives with their transition to Kestra, without the other broker-dealers’ or the customers’ knowledge or consent, causing those broker-dealers to violate the SEC’s Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Information.
The firm agreed to the sanctions and paid a fine of $125,000.
April 2019 – Pennsylvania Department of Banking and Securities Sanctions Kestra for Failure to Supervise
Kestra reportedly failed to reasonably supervise one agent in connection with the sales of structured products to his clients in Pennsylvania. The firm was fined $30,000.
February 2019 – FINRA Sanctions Kestra Financial for Mutual Fund Overcharges
FINRA censured and fined Kestra Financial $225,000 and the firm had to pay $1.9 million in restitution for allegedly overcharging more than 3,200 mutual fund investors over a nine-year period.
According to a Letter of Acceptance, Waiver & Consent, the independent broker-dealer failed to apply fee waivers on certain mutual funds that were sold to customers between July 1, 2009 and Feb. 22, 2018.
FINRA said “Kestra failed to reasonably supervise its registered representatives’ recommendation and sale to its customers of $52 million in L-share class variable annuities.”
November 2016 – FINRA Sanctions Kestra for the sales and supervision of Variable Annuity products
According to FINRA, between October 1, 2013 and June 30,2014 Kestra failed to reasonably supervise its registered representatives’ recommendation of multi-share class variable annuities to its customers. Kestra also reportedly failed to provide training to its registered representatives and principals on the sale and supervision of multi-share class VAs. Further, Kestra also failed to establish, maintain, and enforce an adequate supervisory system.
The firm was censured and fined $475,000.
Investigating Potential Claims
All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct. 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.
When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.
Free Consultation with a Securities Attorney
The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.
If you have concerns regarding investments you purchased through Kestra Investment Services and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.