FINRA Broker Disciplinary Action Report: October 2019
Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.
For our part, we like to pick out some of the highlights from each report. Specifically, we’re looking for schemes or abuses that might be more far-reaching than the individual cases brought through the FINRA arbitration process.
Brokers & Brokerages Barred, Suspended, and/or Fined by FINRA
David John Volpe (CRD #2543478, Gilbert, Arizona)
Without admitting or denying the findings, Volpe consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA in connection with an investigation into whether he engaged in a private securities transaction or borrowed funds from a customer.
Eldridge Foster Parks (CRD #1041447, Chesaning, Michigan)
Without admitting or denying the findings, Parks consented to the sanction and to the entry of findings that he failed to appear for on-therecord testimony requested by FINRA after a customer of his member firm alleged that he made unsuitable securities recommendations.
Lori Sullivan Antolovic (CRD #1480968, Dallas, Texas)
Without admitting or denying the findings, Antolovic consented to the sanctions and to the entry of findings that she failed to confirm that an individual, a member of Company A’s board of directors, had authority to direct the payment of a $2 million development fee to a company he controlled (Company B) from the proceeds of an offering. The findings stated that Antolovic structured a conduit issuance of municipal securities to refinance the debt of Company A. Antolovic’s member firm served as the sole underwriter for the offering. In email communications with Antolovic, the individual made several statements suggesting that perhaps he had not informed Company A of all the specific costs to be paid out of the cost of issuance. Despite indications that other officials at Company A may not have known of this material aspect of the financing, Antolovic made provision in the offering for the payment of the fee. In fact, Company A had not specifically authorized the $2 million payment. Antolovic disclosed the fee to Company A shortly before the issuance and it later demanded that Company B return the fee. After litigation was filed, the payment was refunded pursuant to a settlement between the parties involved in the litigation.
Ken Kavanagh (CRD #4502223, Hawley, Pennsylvania) August 5, 2019
Without admitting or denying the findings, Kavanagh consented to the sanctions and to the entry of findings that he engaged in outside business activities without providing prior written notice to his member firm. The findings stated that Kavanagh managed the personal affairs of professional athletes, including over 40 professional athletes who were clients of both Kavanagh and the firm. Kavanagh formed two entities to facilitate his outside activities, and opened and maintained checking accounts on behalf of the entities through which he received payments for the personal services he provided. Kavanagh received substantial income from his outside activities, generating approximately $5 million in fees from these firm clients as payment for the personal services he provided. The findings also stated that Kavanagh concealed his relationship with the entities by naming a close relative as the sole owner or member, and as the authorized representative on the entities’ bank accounts. Kavanagh also falsely attested on annual compliance questionnaires that he was not involved with any outside business activities.
Stephen Allen Kelbick (CRD #1429133, Penllyn, Pennsylvania) August 13, 2019
Without admitting or denying the findings, Kelbick consented to the sanctions and to the entry of findings that he exercised discretionary trading authority and effected trades in the account of a customer at his member firm without having obtained prior written authorization from the customer or approval from the firm to treat the account as discretionary.
For the full FINRA Disciplinary Report, please click here.
