The Securities and Exchange Commission announced a settlement in the case of a former broker accused of fraud and Regulation Best Interest violations, according to Financial Advisor.
Christopher Booth Kennedy, who worked as a registered representative for Western International Securities Inc., will pay a total of about $2.1 million. He was barred by the Financial Industry Regulatory Authority last year following allegations of excessive trading in the accounts of clients.
The SEC filed a civil injunctive action against Kennedy, saying that the securities law violations he committed resulted in millions of dollars of losses for his former brokerage customers.
The commission alleged that between February 2021 and July 2021, Kennedy made false and misleading statements to his customers regarding the value and success of his trading strategy. His fraudulent conduct allegedly included sending one customer falsified account statements that grossly overstated the value of the customer’s account.
The SEC’s complaint also said that Kennedy violated Reg Best Interest by recommending a short-term, high-volume investment strategy in 19 brokerage retail customer accounts without a reasonable basis for doing so. His recommendations were said to have resulted in more than $363 million in total transactions spread through the 19 accounts, ultimately resulting in over $9 million in customer losses.
Kennedy was charged with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 thereunder of the Securities and Exchange Act of 1934, as well as Regulation Best Interest, Rule 15l-1(a) of the Exchange Act.
Kennedy has agreed to settle the charges by paying $958,134 in disgorgement with $218,267 in prejudgment interest and a $958,134 civil penalty.
FINRA barred Kennedy from the industry in November 2023 over allegations that included violating Reg BI rules.
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