FINRA filed a complaint against former Western International Securities broker Christopher Booth Kennedy in Southern California, alleging churning and willful violations of the SEC regulation that requires brokers act in the best interest of their customers (Regulation Best Interest). Kennedy purportedly effected discretionary transactions excessive in size or frequency and used discretion without authorization, falsified documents, and committed other violations of securities laws and industry regulations.
According to the complaint, Kennedy acted with intent to defraud or at minimum with reckless disregard of his customers' interests and, in doing so, churned their accounts resulting in losses.
The report states that Chris Kennedy (CRD #4498061), who worked at Western International Securities branches in Tarzana and Woodland Hills from 2017 through 2021, directed over 5,000 trades representing more than $350 million in the accounts of multiple investment customers, including elderly brokerage clients.
FINRA alleges that this excessive trading caused the customers to collectively lose $2.3 million in value from their accounts, in addition to paying $715,000 in total trading costs and margin interest, with nearly $600,000 in commission payments alone. The regulator wrote that Kennedy's trading was "excessive in light of those customers' investment objectives."
According to investigators, Kennedy made fake account statements to hide the results of his trading and made a series of additional false statements that inflated the customers' account values while allegedly concealing that at least one account under Kennedy's control had lost nearly all of its value.
Kennedy allegedly "repeatedly lied" to FINRA during the investigation, the report states, and allegedly engaged in the churning and excessive trading misconduct from 2020 through 2021.
The allegedly excessive and risky trading activity affected customers whose primary investment objective was income or growth and their risk tolerance was moderate. One particular elderly customer opted to invest "without being aggressive," only for Kennedy to direct well over 1,000 trades and purchase hundreds of thousand dollars in options that resulted in a total loss.
The scheme finally came to an end when one of Kennedy's customers contacted Western International directly to ask about their account, which Kennedy allegedly had been lying about.
If you invested with former Western International Securities broker Christopher B Kennedy or with any investment adviser or representative who has excessively traded or used discretion to transact in your account without authorization, and these unsuitable transactions have resulted in damages such as losses or the charging of exorbitant fees, sales charges, or commissions, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.