- July 31, 2019
- Kestra Investment Services
Michael Thomas Lee (CRD 502893) is a former Financial Advisor at Kestra Financial Services in Darien, CT. Michael Lee has been in the securities industry since 2002 and previously worked at Morgan Stanley, Citigroup and Commonwealth Financial Network.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in July 2019, Michael Lee was sanctioned by FINRA, suspending him from associating with any broker-dealer for a period of one year. Michael Lee was also fined $12,500. The alleged misconduct giving rise to the suspension is that “he engaged in an outside business activity, a prospective exchange-traded fund (ETF), without providing prior written notice to his member firm.” This is referred to as “selling away.”
According to the sanction, “Lee distributed written materials to potential investors that contained inaccurate statements about the ETF. Lee used his personal e-mail and an e-mail address associated with the ETF for his outside business activities that included soliciting potential investors and distributing written materials prepared by Lee’s business partner. None of the individuals solicited by Lee invested in the ETF. The written materials falsely represented that the ETF was a hybrid registered investment advisor with $20 million in assets under management, and that the firm’s affiliated registered investment advisor was sponsoring and providing certain administrative services to the ETF. Lee also made false statements to the firm on two annual compliance questionnaires concerning his use of an undisclosed email address to conduct securities business.”
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2016051985602%20Michael%20Thomas%20Lee%20CRD%204502893%20AWC%20sl.pdf
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.
The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org.