INVESTOR UPDATE—Terminated Financial Advisor, Mitchell Kurtz, Sanctioned By FINRA For Selling Away
The Wolper Law Firm previously announced it was investigating claims against Mitchell Kurtz, a former Financial Advisor at Henley & Co. in Roslyn Heights, NY. Mitchell Kurtz has been in the securities industry since 1994 and previously worked at Raymond James. Since commencing the investigation, Mitchell Kurtz was barred by FINRA from working in the securities industry.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), on July 30, 2018, Henley & Co. terminated Mitchell Kurtz for “selling away.” Specifically, his employing brokerage firm stated:
“THE FIRM DETERMINED THAT BASED ON RECENT DISCOVERIES, INCLUDING DISCUSSIONS WITH MR. KURTZ AND THE SEC AUDITORS, AND ADMISSIONS MADE DURING AN INTERVIEW WITH MR. KURTZ AND MANAGEMENT THAT IT IS NECESSARY TO TERMINATE MR. KURTZ’ REGISTRATIONS WITH HENLEY & COMPANY LLC. IT HAS BEEN FOUND THAT MR. KURTZ VIOLATED BOTH FINRA AND SEC RULES AND FIRM POLICIES AND PROCEDURES REGARDING OUTSIDE BUSINESS ACTIVITIES, SELLING AWAY, FIDUCIARY DUTY OBLIGATIONS, VIOLATION OF PROFESSIONAL STANDARDS AND THE FIRM’S CODE OF ETHICS.”
On December 3, 2018, FINRA sanctioned Mitchell Kurtz for the same conduct, which gave rise to his termination.
Without admitting or denying the findings, Kurtz consented to the sanction and to the entry of findings that he failed to provide FINRA with requested documents and information during its review of the information on Kurtz’s Form U5 filed by his member firm stating that he violated both FINRA and SEC rules and firm policies and procedures. The findings stated that explicitly, Kurtz violated the firm’s policies and procedures regarding outside business activities, selling away, fiduciary duty obligations, and he violated professional standards and the firm’s code of ethics.
For a full copy of the FINRA sanction, click https://www.finra.org/sites/default/files/fda_documents/2018059423701%20Mitchell%20Kurtz%20CRD%202437746%20AWC%20va.pdf
Outside business activities are closely monitored by brokerage firms and regulators to ensure that Financial Advisors do not involve customers in investment opportunities that are not approved by the broker’s employing brokerage firm. This practice is known as “selling away.”
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 this employment event, Mitchell Kurtz has been the subject of three customer complaints in his career for alleged sales practice violations. In those cases, customers alleged the following:
- April 2010—Customer alleged “suitability, breach of contractual duty, misrepresentation, breach of fiduciary duty.” The matter was settled for $35,000.
- May 2009—Customer alleged “breach of fiduciary duty…churning, unauthorized transactions…” The matter was settled for $1.1 million
- June 2003—Customer alleged “churning, unsuitability.” The matter was settled for $400,000.
To review the full disclosure report for Mitchell Kurtz, click https://brokercheck.finra.org/individual/summary/2437746#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. Part of the suitability analysis requires that the trades are quantitatively suitable, meaning that the broker cannot execute excessive trades or engage in churning.
The Wolper Law Firm is interested in speaking with clients of Mitchell Kurtz as part of its investigation. We can be reached at 800.931.8452 or by email at firstname.lastname@example.org. 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.
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