- November 25, 2019
- NY Life Securities
David Kendrick (CRD # 4384666) was a Financial Advisor at NY Life Securities in Shreveport, Louisiana. David Kendrick previously worked at Lincoln Financial Advisors Corp.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on November 20, 2019, David Kendrick was suspended by FINRA for 18 months and fined $30,000 for allegedly engaging in unapproved private securities transactions. According to the FINRA sanction:
“Kendrick participated in nine private securities transactions without providing prior written notice to or receiving written approval from NYLife. Kendrick and five other individuals (including four of Kendrick’s Firm customers) also used another investment vehicle, known as SCV, to facilitate one of the investments. Through the investment club TC and SCV, Kendrick solicited, recommended and facilitated investments totaling $290,000 in three private placements, including investments made by five Firm customers who were members of TC and SCV. Kendrick’s participation in these private securities transactions included, among other things: selecting and recommending investment opportunities to TC and SCV members; circulating information and scheduling meetings regarding the investment opportunity; collecting investment checks; and completing and signing investor questionnaires and stock purchase agreements on behalf of TC. Kendrick also personally invested a total of $106,297 in six different private placements.”
For a copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2018058397101%20David%20Quentin%20Kendrick%20CRD%204384666%20AWC%20jm.pdf
This practice is known in the industry as selling away. 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
In May 2018, David Kendrick was “permitted to resign” after “failing to disclose his participation in an investment club and other unapproved outside business activities including investments in private placements. The company’s review found Mr. Kendrick invested his own money and provided information about investment opportunities to certain New York Life clients and other investors who invested in private placements.”
For a copy of David Kendrick’s CRD, click https://brokercheck.finra.org/individual/summary/4384666#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.
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