Former Kestra Stockbroker Michael Thomas Lee Fined and Suspended for Engaging in Outside Business Activities

Michael Thomas Lee of Darien, Connecticut submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he has been fined and suspended for allegedly engaging in an outside business activity in violation of FINRA Rules 3270 and 2010. From June 2014 until February 2017, Michael Thomas Lee was registered with Kestra Investment Services (Kestra) as a General Securities Representative. According to the FINRA findings, Lee engaged in an outside business activity known as the Origin Fund, a prospective ETF fund, without notice or approval from his firm. The findings stated that Lee allegedly solicited  potential investors and distributed written materials prepared by his business partner using his personal e-mail and an e-mail address associated with the fund. FINRA stated that although none of the individuals invested in the fund, the materials falsely represented that the Origin Fund was a hybrid registered investment advisor with $20 million in assets and that Kestra was sponsoring and providing services to the fund. In addition to those FINRA findings, Lee allegedly falsely attested his use of an undisclosed email address to conduct securities business on two annual compliance questionnaires.

Continue Reading

Kestra Investment Services Fined for Variable Annuity Supervisory Failures

Kestra Investment Services, Inc., headquartered in Austin, Texas, submitted a Letter of Acceptance, Waiver and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) for failing to adequately supervise the sales of variable annuities, specifically L-share variable annuities. Registered with FINRA since 1997, Kestra Investment Services currently has 1,845 registered representatives and 639 branch offices.  FINRA found that from October 1, 2013 to June 30, 2014, Kestra Investment Services failed to establish, maintain, and enforce an adequate supervisory system to identify red flags related to the sale of L-share variable annuities.  Further, FINRA found that Kestra Investment Services failed to provide its registered representatives with proper training and guidance on suitability considerations for these variable annuities.  According to FINRA, the L-share annuities are a complex investment product that is only suitable for a narrow class of investors and that Kestra Investment Services allegedly failed to provide its registered representatives with appropriate guidance to discern this class of investor.

Continue Reading