A Pennsylvania financial advisor has been barred from the financial industry by the Securities and Exchange Commission following allegations of fraud, according to Financial Advisor.
37-year-old Sean Michael Kane of Philadelphia did not admit or deny the SEC’s findings but consented to the sanction.
Kane and his father, 67-year-old Kevin Kane, 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.
Around the time the two were fired, Waddell & Reed was finalizing the sale of its brokerage business to LPL Financial. The SEC said that the Kanes used the information about the deal to solicit clients to join them at the new firm, even though they had been terminated.
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. The two managed more than $27 million in assets for more than 100 clients,
“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 following its initial complaint. “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.”
Pursuant to Section 15(b)(6) of the Exchange Act, and Section 203(f) of the Advisers Act, Sean Kane is barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization with the right to reapply for reentry after three years to the appropriate self-regulatory organization, or if there is none, to the SEC. A settlement has not yet been issued for Kevin Kane.
Waddell & Reed launched an investigation into the possible impersonation of clients by the Kanes, and in March 2021 the firm sent the two cease-and-desist letters and demanded the return of confidential client information.
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 (888) 655-6002 or through our online contact form for a no-cost evaluation of your matter.
