Herbert Leonard Kaye, a Delray Beach, Florida based broker with First Allied Securities, Inc. (First Allied), submitted a letter of acceptance, waiver, and consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) findings that he entered discretionary trades in a customer’s account without the necessary prior written customer authorization.
FINRA found that although Herbert Kaye had the verbal consent of his customer, he neglected to obtain the necessary written consent when he entered over 2,000 trades in equities and exchange traded funds (ETFs) in the customer’s account and generated over $173,000 in commissions. FINRA’s findings state that Herbert Kaye also recommended that his customer invest $1.1 million in a gold and precious minerals mutual fund, for which he received $11,000 in gross commissions. This mutual fund recommendation was unsuitable in light of the customer’s age, investment objectives, and the fact that Herbert Kaye allegedly knew that his customer wanted to avoid investments with large market fluctuations. Continue Reading