- June 7, 2020
- Kestra Investment Services
Donald Padilla (CRD # 5850275) was a Financial Advisor at Kestra Investment Services in Alhambra, California. Donald Padilla has been in the securities industry since 1998 and previously worked at LPL Financial and National Securities Corp.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2020, FINRA sanctioned Donald Padilla, suspending him for 5 months and fining him $10,000 for allegedly using unapproved email accounts to communicate with customers. Specifically, the FINRA sanction states:
“Without admitting or denying the findings, Padilla consented to the sanctions and to the entry of findings that he set up and used unapproved email accounts to correspond with his member firm’s customers about securities business and circumvented its supervision of his business. The findings stated that Padilla sent numerous electronic communications via the email accounts to firm customers regarding firm business such as, among other things, account funding confirmations, portfolio recommendations, fee summaries, and trade confirmations. Padilla hid the email accounts from the firm during branch audits. The findings also stated that Padilla caused the firm to fail to comply with its recordkeeping obligations by using the email accounts to conduct firm business which prevented it from preserving records of these communications. The findings also included that Padilla made misrepresentations on multiple firm annual compliance questionnaires indicating that he only used his firm email address for securities business and client-related correspondence.”
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2015048141902%20Donald%20G.%20Padilla%20CRD%203053711%20AWC%20va.pdf
In March 2018, Kestra Investment Services terminated Donald Padilla for “failure to follow firm policy, specifically in relation to correspondence requirements and marketing designations.”
In addition, Donald Padilla has been the subject of three customer complaints during his career, alleging sales practice misconduct. The complaints were denied by the various brokerage firms.
For a copy of Donald Padilla’s CRD, click https://brokercheck.finra.org/individual/summary/3053711#disclosuresSection
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s:
• Other investments
• Financial situation and needs
• Tax status
• Investment objectives
• Time horizon
• Liquidity needs
• Risk tolerance
• Any other information disclosed by the customer
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