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C. L. King & Associates, Inc. (CL King) of Albany, New York was named a Respondent in a Financial Industry Regulatory Authority (FINRA) complaint that alleges CL King assisted customers in a scheme to profit from the deaths of vulnerable, elderly and terminally ill patients. The complaint alleges that CL King failed to establish and maintain proper supervisory procedures and failed to recognize suspicious activity in regard to a death-put investment scheme.

The FINRA investigators found that two CL King customers recruited terminally ill individuals by offering to pay them between $10,000 and $15,000 in exchange for their agreement to open a joint brokerage account. Between January 2012 and October 2013, CL King opened 36 accounts for its customers with individuals often signing agreements relinquishing their rights over, and responsibilities for, the assets in their accounts. Once the accounts were opened, the CL King customers used the joint accounts to purchase discounted corporate bonds, notes, and market-linked CDs (MLCDs) containing a survivor’s option or “death put,” which allowed the customers to redeem the investments for the full principal amount prior to maturity upon the death of a beneficial owner.

FINRA found that upon the death of a client that opened a joint account, CL King redeemed the Death Put Investments on behalf of the firm customers. In total, CL King redeemed approximately $60 million in Death Put Investments while making $1.2million in margin interest and trading profits from the Death Put Investment business. FINRA found that CL King made material misrepresentations and failed to provide all material information to the issuers and therefore violated NASD Conduct Rule 3010 and FINRA Rules 3110 and 2010. FINRA has requested findings and conclusions of law that CL King committed the violations charged and alleged herein and ordered that one or more of the sanctions provided under FINRA Rule 8310(a), including that Respondents be required to fully disgorge any and all ill-gotten gains, together with interest.

FINRA rules require brokerage firms to establish and implement a reasonable supervisory system to protect customers from the risks associated with investing. The implementation of the rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, as well as the brokerage firm’s own policies and procedures. If broker-dealers and their supervisors fail to establish and implement these protective measures, they may be held liable to account holders for investment losses which stem from their employees’ misconduct. Therefore, investors who have suffered losses due to a brokerage firm’s failure to supervise the unsuitable recommendations of its representatives can bring forth claims to recover damages against firms, like C. L. King & Associates, which have a duty to supervise employees in order to protect their customers’ interests.

Have you suffered losses in your C. L. King & Associates account due to unsuitable activity in your account? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation. Mr. Pearce is accepting clients with valid claims against C. L. King & Associates stockbrokers who may have engaged in misconduct and caused investors losses.

The most important of investors’ rights is the right to be informed!  This Investors’ Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida.  For over 40 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues.  The lawyers at our law firm are devoted to protecting investors’ rights throughout the United States and internationally!  Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.










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Robert Wayne Pearce

Robert Wayne Pearce of The Law Offices of Robert Wayne Pearce, P.A. has been a trial attorney for more than 40 years and has helped recover over $125 million dollars for his clients. During that time, he developed a well-respected and highly accomplished legal career representing investors and brokers in disputes with one another and the government and industry regulators. To speak with Attorney Pearce, call (800) 732-2889 or Contact Us online for a FREE INITIAL CONSULTATION with Attorney Pearce about your case.

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