Former Centaurus Financial Inc. Advisor, Tony Kassaei, Barred By FINRA For Allegedly Participating in Undisclosed and Unapproved Private Securities Transactions
Tony Kassaei (CRD # 4375259) was a Financial Advisor at Centaurus Financial, Inc. in Irvine, CA. Tony Kassaei has been in the securities industry since 2001 and was registered at seven different brokerage firms including Summit Brokerage Services, Inc., J.P. Turner & Company LLC, and LPL Financial Corporation.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on September 22, 2020, Tony Kassaei was barred by FINRA. According to the FINRA sanction:
“Without admitting or denying the findings, Kassaei consented to the sanction and to the entry of findings that he participated in undisclosed and unapproved private securities transactions through which individuals, most of whom were customers of his member firm, invested at least $2.6 million in real-estate businesses. The findings stated that the owner of the real-estate businesses had previously worked with Kassaei at the firm. The firm had not approved Kassaei’s participation in these security sales, they were not recorded on the firm’s books and records, and Kassaei acted outside the regular course and scope of his employment with the firm when participating in the securities transactions. Subsequently, the owner pled guilty to wire fraud, admitting that he had engaged in a real-estate Ponzi scheme that caused approximately $12 million in investor losses. The individuals in whose investments Kassaei participated lost at least $1.3 million. The owner paid Kassaei substantial sums, including at least $125,000 while he facilitated securities transactions between the owner and these individuals. In addition, in response to a specific inquiry by the firm, Kassaei falsely represented that he had not participated in a customer’s private securities transactions totaling $500,000. The findings also stated that Kassaei refused substantially to comply with FINRA’s request for on-the-record testimony, documents, and information. FINRA had opened an investigation of Kassaei’s involvement in the owner’s scheme. While Kassaei initially appeared for testimony, he ultimately refused to answer its questions, left the testimony, and did not reappear to finish answering the questions. Moreover, FINRA requested that Kassaei produce emails from an email account that he had used to facilitate private securities transactions with the owner. Kassaei initially granted FINRA access to the account to obtain the requested emails, but then terminated its access to the account before FINRA had obtained the requested emails and deleted emails in the account.”
For a copy of the FINRA sanction, click here
The Financial Industry Regulatory Authority (FINRA) strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.
The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.
In addition, to the above Tony Kassaei was the subject of a customer complaint disclosure alleging sales practice misconduct. The complaint alleged the following:
• February 2011—”UNSUITABLE RECOMMENDATIONS, MISREPRESENTATION, NEGLIEGENCE, FRAUD AND BREACH OF FIDUCIARY DUTY.” The matter settled for $84,000.
For a copy of Tony Kassaei’s CRD, click here
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