Kevin Kimball Meadows of Columbus, Georgia submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly engaging in excessive and unsuitable transactions in violation of FINRA Rules 2111 and 2010.
In June 2013, Kevin Kimball Meadows joined Cape Securities as a general securities representative. According to the FINRA findings, Meadows excessively and unsuitably traded three accounts of a customer. FINRA found that during the relevant period, one account had a turnover rate as high as 10.10 and a cost-to-equity ratio as high as 53 percent, the second account had a turnover rate as high as 7.93 and a cost-to-equity ratio as high as 44 percent and the third account had a turnover rate as high as 6.93 and a cost-to-equity as high as 37 percent resulting in a total loss of approximately $39,671. In addition to the FINRA findings, the customer represented to FINRA that his risk tolerance was never aggressive, although his documents with Cape reflected that his investment objective was capital appreciation/growth with an aggressive risk tolerance.
FINRA Rule 2111 provides that a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to determine the customer’s investment profile. A customer’s investment profile includes such factors as the customer’s age, financial situation and needs, investment objectives, investment experience, and investment time horizon. A violation of FINRA Rule 2111 also constitutes a violation of FINRA Rule 2010.
Without admitting or denying FINRA’s findings, Kevin Kimball Meadows was suspended from association with any FINRA member in all capacities for three months. Due to Meadows’ financial status, no monetary sanction has been imposed. The suspension was in effect from February 18, 2020, through May 17, 2020.
Stockbrokers have been known to engage in many practices that may violate industry and firm rules, practices, and procedures. In order to protect investors from stockbroker misconduct, FINRA rules require brokerage firms to establish and implement a supervisory system. The implementation of these industry rules requires supervisors to monitor their employees to ensure compliance with federal and state securities laws, securities industry rules and regulations, and the brokerage firm’s own policies and procedures. If broker-dealers and/or their supervisors fail to establish and implement these protective measures, they may be liable to investors for damages which flow from the broker’s misconduct. Therefore, investors who have suffered losses stemming from excessive, unsuitable trading, and/or other misconduct by their broker can file claims to recover damages against broker-dealers, like Cape Securities, which should consistently oversee its brokers’ activities in order to prevent the above-described misconduct.
Have you suffered losses in your Cape Securities account due to excessive and unsuitable trading by your broker? Was Kevin Kimball Meadows your stockbroker? 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 Cape Securities stockbrokers who may have engaged in broker 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 firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.