• October 20, 2023
• Kahn Brothers

Thomas Graham Kahn (CRD#: 263171) is a registered broker and investment advisor at Kahn Brothers LLC., in New York, NY.

Broker’s Background

Thomas Kahn entered the securities industry in 1969. He previously worked for Lehman Brothers Kuhn Loeb Incorporated, and Abraham & Co. Inc.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in June 2022, the United States Securities and Exchange Commission (SEC) deemed it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 and Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) against Kahn Brothers Advisors, LLC (“KIA”) and Thomas Kahn (“Kahn”) (collectively, “Respondents”). The Commissions find that this matter primarily concerns misstatements and omissions by registered investment adviser KIA and its principal owner and president, Kahn, to KIA advisory clients and prospective clients relating to brokerage services provided by KIA’s affiliated broker-dealer, Kahn Brothers LLC (“KBD”). Specifically, KIA and Kahn (a) failed to fully and fairly disclose to advisory clients all material facts related to the conflict that arose from KIA’s use of an affiliated broker-dealer to execute client transactions; and (b) made misleading statements to clients and prospective clients that KIA would aggregate client transactions to reduce commissions. KIA and Kahn also failed to seek best execution for advisory clients, failed to conduct a best execution review of KBD, and failed to adopt and implement written policies and procedures reasonably designed to prevent violation of the Advisers Act and its rules. According to KIA’s policies and procedures, Kahn was responsible for all aspects of KIA’s compliance program and its implementation, as well as the firm’s disclosure obligations. As a result of his conduct, Kahn willfully violated Section 206(2) of the Advisers Act, and caused the firm’s willful violations of Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder.

The following sanctions were ordered:

• Cease and desist
• Censure
• Civil and Administrative Penalty(ies)/Fine(s)
  • $250,000
• Disgorgement
  • $701,799
• Monetary Penalty other than Fined
  • $146,100.
• Prejudgment interest

For a copy of Thomas Kahn’s FINRA BrokerCheck, click here.

 

We Help Investors Recover Investment Losses

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 age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

 

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 mwolper@wolperlawfirm.com.