A father and son duo of financial advisors who worked together at a firm in Pennsylvania have been charged with fraud, the Securities and Exchange Commission announced.
The charges were filed against 66-year-old Kevin Kane and 36-year-old Sean Kane, who were terminated from Waddell & Reed in York, Pa. in February 2021. According to the SEC, the Kanes were discharged for cause due to multiple violations of the firm’s policies and procedures, including unauthorized outside business activities and misuse of client data and client signatures.
The SEC’s complaint alleged that after they were fired, the two falsely represented to clients that they left the firm voluntarily in an effort to convince the clients to join them at a new firm. The duo also allegedly misrepresented to certain clients that they were still associated with Waddell & Reed and could still gain access to client accounts.
It was further alleged that the Kanes impersonated certain clients in phone calls to the former firm so they could execute transactions in the customers’ accounts.
“As investment advisers, the Kanes owed each of their advisory clients a fiduciary duty to act in the client’s best interest, to exercise the utmost good faith in dealing with clients, to disclose all material facts to their clients, and to employ reasonable care to avoid misleading those clients,” the SEC said in a statement. “Instead, the Kanes defrauded and breached their fiduciary duty to these clients by telling clients they had voluntarily ended their association with Waddell Reed or were still affiliated with the firm. They also failed to alert clients to their termination and inability to perform transactions in their accounts.”
In a complaint filed in federal district court in Pennsylvania, the Kanes were charged with violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking permanent injunctions and civil penalties.
Lewitas Hyman routinely represents investors nationwide who were harmed when financial professionals and their firms breached their fiduciary and other duties. Our team includes lawyers who have worked for large financial institutions, including Morgan Stanley and UBS Financial Services, and regulatory bodies such as the SEC. If you were the victim of a breach of fiduciary or other duties owed to you by a financial professional or financial firm, contact Lewitas Hyman at (844) 651-2643 or through our online contact form for a no-cost evaluation of your matter.