FINRA Board Candidate Brian Kovack Says He'll Represent Firms, Not Investors

Attorney Advising Disclaimer

FINRA will elect three members to its 24-member Board of Governors later this month, and one—Brian John Kovack of the firm Kovack Securities—says that, if elected, he plans not to represent investors, but brokerages instead.

According to a BankInvestmentConsultant article, medium-sized firm candidate Kovack was asked specifically whether he would represent investors' interests as a Board member, replying that he will chose firms over investors: "No. I would not," going on to say that, if elected, his focus will be on addressing "frivolous" claims by "upset clients who file cases for litigation." Kovack is competing for the Board seat with First Southwest Company Vice Chairman John Muschalek.

Even though FINRA, as the leading industry regulator, vows to ensure that "every investor receives the basic protections they deserve," Kovack, when specifically asked whether he would represent investors' interests as a Board member, replied: "No. I would not," going on to say he will represent firms and their brokers, whom he believes are the truly disadvantaged parties.

Kovack also went on record saying he thinks brokers should not have to report all disclosures, such as leins, currently required in arbitration and on the FINRA BrokerCheck service. He also wants to bring back the dispositive motion practice (motions to dismiss) which the securities industry abused so much that FINRA changed its rules prohibiting most forms of such practice.

According to BrokerCheck, Kovac's firm, Kovack Securities, has paid out multiple settlements to clients as a result of arbitration claims and over various allegations of misconduct, including breach of contract related to margin calls, breach of fiduciary duty, failure to supervise, negligence, and misrepresentation in annuities, stocks, and bonds. Interestingly, missing from Kovack Securities Brokercheck report was the disclosure of a $200,000 punitive damages award in 2012 (FINRA Case No. 10-03532), where the arbitration panel ruled in part: "[t]he panel determined that punitive damages should be awarded due to the egregious behavior on the part of the broker and the apparent lack of any system of supervision by the Respondent." The Claimant filed in federal court to confirm the award, and in March 2012, the parties (Claimant and Kovack Securities) jointly agreed to vacate the award.

If you have invested with any broker, financial adviser, or firm whose misrepresentations, supervisory inadequacies, or other deficiencies or failure to comply with appropriate securities laws and regulations have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.

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