The FINRA Office of Hearing Officers barred broker James Scott McKee for alleged actions covering a wide variety of misconduct, including making willful and reckless material misrepresentations and omissions, inappropriate conversions of customer funds, unsuitable investment recommendations, making false statements to a FINRA member firm, engaging in securities transactions without firm consent and failing to comply with FINRA'S investigation process.
According to the OHO disciplinary proceeding, McKee committed several serious violations between 2006 and 2011, while associated with LPL Financial Corporation (through September 2008), Berthel, Fisher & Company Financial Services, Inc. (September 2008 through November 2010) and Morgan Stanley Smith Barney (December 2010 through September 2011). Morgan Stanley terminated McKee's employment on Sept. 30, 2011 for soliciting outside business transactions without notifying or receiving permission from the firm.
The findings state that while at all three firms, McKee engaged in fraudulent sales of securities, misrepresentation of material facts and false statements—both to customers and to his employing firms—private securities transactions and misuse of customer funds.
Specifically, FINRA claims that in 2006, McKee encouraged a customer to invest in a home remodeling venture while at LPL; however, FINRA's investigation concluded that after depositing the customer's investment in a bank account McKee controlled, the broker failed to return or repay any of the principal investment to his customer, much less the promised profit and fees.
While at Berthel Fisher, McKee allegedly persuaded customers to invest in Sam's Upton, LLC and Bedrocks Coffee, LLC, two tenants of shopping centers McKee had owned. In his advertising material, according to FINRA, McKee had advertised that he was an attorney when he in fact had never graduated from law school nor passed a bar examination. After misrepresenting the terms of the investments, making false promises of unusually high rates of return and failing to disclose his financial interest in the shopping centers, Bedrocks filed for bankruptcy, resulting in one customer's loss of $48,000. A second customer lost a $100,000 principal while a third investor lost $50,000.
In 2011 while at Morgan Stanley, McKee owned Ventis Investment Properties, LLC, and allegedly made further false representations to a Morgan Stanley customer, persuading this customer to invest $100,000 by taking the customer to tour a local housing complex McKee falsely stated was to be part of Ventis (the complex was, in fact, unrelated to Ventis), further enticing this investor with a falsely promised return rate of 20 percent annually. The findings state that McKee then deposited the funds into a bank account he controlled, furthermore transferring $70,000 to another customer.
FINRA further found that McKee gave untruthful testimony during an on-the-record interview in 2011, while failing to produce documents and information requested in regards to FINRA's investigation.
Because of the nature of this misconduct, McKee's attempt to conceal his misconduct and the infliction of "substantial economic injury" to investors, The OHO decided to banish McKee from the securities industry, contending, with FINRA's Department of Enforcement, that McKee is "unfit to work in the securities industry."
If you have invested with James Scott McKee, firms he formerly associated with—LPL Financial, Berthel, Fisher & Co. or Morgan Stanley—or with any other broker or firm who has made false promises, engaged in financial misconduct or fraudulent activity or otherwise effected inappropriate actions that have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.