FRANK KELLY Suspended For Unauthorized Trading

The Financial Industry Regulatory Authority (“FINRA”) announced it has issued HD Vest Investment Services securities broker Frank Kelly (CRD#: 2028226, New Cumberland, Pennsylvania) a three month suspension and fine of $5,000. Mainly, FINRA found Kelly violated FINRA Rules on unauthorized trading and trading with discretion. The sanctions became effective upon Kelly’s filing of a Letter of Acceptance, Waiver, and Consent (the “AWC”) on May 24, 2019, which FINRA accepted May 30, 2019. Here is a summary of some key findings laid out in the AWC.

Frank Kelly Makes Unauthorized Liquidation Of HD Vest Customer’s Mutual Funds, Violating FINRA Rule

First of all, FINRA says Frank Kelly made unauthorized trades in a customer’s account in 2016 in violation of FINRA Rule 2010. The AWC’s findings show that Kelly initiated a sale of 1,058 shares of mutual funds in an account owned by EG – an HD Vest Investment Services customer. Supposedly, EG did not permit Kelly to sell the customer’s mutual funds. Because of this, EG contacted HD Vest to complain about Kelly’s activities. Notably, FINRA Rules hold that a representative violates FINRA Rule 2010 by executing a trade without a customer’s authorization.

Kelly Uses Discretion In HD Vest Customers’ Accounts In Violation Of Firm Policy And FINRA Rule

Secondly, FINRA says Frank Kelly traded with discretion in an HD Vest customer account in violation of NASD Rule 2510(b) and FINRA Rule 2010. The AWC’s findings show that HD Vest maintained a policy prohibiting discretionary trading. In fact, the brokerage firm said that Kelly was not allowed to enter a trade unless the customer gave Kelly specific instructions. Despite this policy, Kelly traded with discretion in accounts of 5 HD Vest customers from 2011 to 2016. Namely, customers did not give written authorization for Kelly’s trading. Not only that, but Kelly did not get permission from HD Vest for any of his discretionary trading. FINRA also indicated that Kelly liquidated an unreasonable or inaccurate amount of securities positions in customer accounts. Finally, FINRA says Kelly did not disclose on compliance attestations that he exercised discretion.

Kelly is not allowed, under any circumstances, to associate with a FINRA member firm while under suspension.

Between August 2, 2005 and April 9, 2019, at least four HD Vest customers complained about Frank Kelly, according to BrokerCheck. Here is a summary of two customers’ disputes:

April 9, 2019 Complaint Alleging Frank Kelly’s Bad Advice

 

The most recent complaint about Frank Kelly comes from an HD Vest Investment Services customer. In the April 9, 2019 complaint, the customer alleges Kelly gave bad advice about a variable annuity. Supposedly, Kelly misled the customer about the suitability of the products Kelly advised the customer to buy. Apparently, the variable annuity did not match the customer’s financial circumstances, goals or risk tolerance. Because of this, the customer demanded compensatory relief in this ongoing matter.

October 10, 2017 Complaint Alleging Kelly’s Omissions About Margin Balance

 

HD Vest Investment Services customers brought a dispute on October 10, 2017 in regard to Frank Kelly’s alleged omissions. Supposedly, Kelly did not tell customers that they had a margin interest or margin balance in connection with their investment accounts. Given these allegations of omissions, HD Vest opted to settle the matter by paying the customer compensatory damages.

Lars Soreide Highest Ethical Standard Award 2018

Lars Soreide Highest Ethical Standard Award 2018

Two other complaints involving allegations of Kelly’s unsuitable transactions at HD Vest settled for a combined $149,000. FINRA BrokerCheck shows Kelly commenced registration through HD Vest in 1995. Have you experienced losses by investing with securities broker Frank Kelly? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.