Regulators have taken action against a former advisor and broker for engaging in questionable trading practices, resulting in significant financial losses for clients. Christopher Kennedy, formerly associated with the Pasadena-based firm Western International Securities, has been banned from the industry by brokerage industry self-regulator Finra.
The allegations state that Kennedy executed an excessive number of trades on just a few client accounts, generating substantial commissions for himself while causing millions of dollars in losses for his clients. From July 2020 to July 2021, Kennedy reportedly conducted an average of 102 trades per account each month on four different accounts owned by six clients.
According to Finra, this type of high-volume trading, also known as churning, not only violated its general rule of conduct but also ran afoul of Regulation Best Interest. Churning is considered a breach of "standards of commercial honor and principles of trade."
Alleged Trading Misconduct Leads to Losses for Clients
Unfortunately, the clients experienced net losses of $2.3 million due to what Finra has described as an "aggressive day-trading strategy." Additionally, they paid over $715,000 in trading costs, including $595,000 in commissions, over the course of one year.
It is important to note that Western International is not implicated in any misconduct. However, the firm has had previous issues related to compliance with Regulation Best Interest (Reg BI). Last June, the Securities and Exchange Commission filed a lawsuit against Western International and five of its brokers for allegedly selling high-risk bonds to clients who were not suitable for such investments. This ongoing case is currently being litigated in federal district court in California.
Contact Our Editorial Team
Whether you have a suggestion, a feedback, or a pitch, our team is here to assist you. We are committed to providing the best content to our readers and welcome the opportunity to collaborate with talented individuals like you.
Thank you for considering sharing your thoughts and ideas with us. We look forward to hearing from you soon!
Note: For any other inquiries or general information, please visit our website or refer to the relevant sections on our platform.