Kovack Securities Inc. (“Kovack Securities”) (CRD#44848) has many different complaints filed by FINRA (Financial Industry Regulatory Authority), state regulatory organizations, and investors such as yourself. At the Law Offices of Robert Wayne Pearce, we have investigated Kovack Securities, its regulatory and customer complaints, and have also represented investors with claims of fraud, negligence, and breach of fiduciary duty against this organization and its financial advisors.
If you believe you have a claim against Kovack Securities, you should strongly consider hiring an investment loss lawyer. You should not wait until it’s too late to file a claim. The Law Offices of Robert Wayne Pearce, P.A., offers free consultations. Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.
Can I Sue Kovack Securities Inc.?
If you’ve lost money caused by Kovack Securities and/or its employees’ misconduct then the answer is, YES, you can sue Kovack but the odds are you signed away your right to sue in court and agreed to resolve your dispute in a FINRA arbitration proceeding. Attorney Robert Wayne Pearce has over 40 years of personal experience in FINRA arbitration proceedings and knows very well how you can not only sue Kovack Securities in FINRA arbitration proceedings, but WIN that arbitration. The easiest way to know if you have a viable case against Kovack Securities is to call Attorney Pearce at our office at 800-732-2889.
What is Kovack Securities Inc.?
Kovack Securities (CRD#44848) has been registered with the SEC and FINRA as a broker dealer since 1998 the company is controlled by the Kovack Family and headquartered in Ft. Lauderdale Florida with small branch offices located throughout the United States. Its independent broker-dealer Business Model has grown through acquisition and organic development of primarily one and two person registered representative offices supervised remotely. Today there are over 150 Kovack Securities branch offices with over 260 registered representatives in every state. It is now one of the 50 largest independent broker-dealer and investment advisory firms in the United States.
Kovack Securities Inc. Has Many Different Regulatory Problems
Kovack Securities’ rapid growth has not been without consequences. There have been at least 4 Federal, state and self-regulatory body disclosure events; that is, final and formal proceedings initiated by a regulatory authority (e.g., a state or federal securities agency like the U.S. Securities and Exchange Commission (SEC) or self-regulatory body like the Financial Industry Regulatory Authority (FINRA) and the North American Securities Administrators Association (NASAA) ) for a violation(s) of investment-related rules or regulations. In addition, there have been scores of customer complaints filed against Kovack Securities for misconduct by its securities sales and investment advisory representatives that are not reported by the firm on its Central Depository Record.
A BRIEF OVERVIEW OF SOME OF THE REGULATORY PROBLEMS KOVACK SECURITIES, INC. HAS FACED OVER THE YEARS*
Kovack Securities has been censured, warned, and fined for its own misconduct and failure to supervise its army of financial advisors.*. An example of one of its supervisory failures is below:
FINRA Sanctions Kovack Securities For UIT Sales Charges
As a result of one of FINRAs routine investigations, it discovered that Kovack Securities failed to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (“UITs”) in violation of FINRA Rule 2010. In addition, FINRA found Kovack Securities failed to establish, maintain and enforce a supervisory system reasonably designed to ensure that customers received sales charge discounts on all eligible UIT purchases in violation of NASD Rule 3010 and FINRA Rule 2010. For these supervisory failures, the FINRA imposed a censure and a fine of $125,000 on the broker-dealer and ordered it to pay the affected customers restitution of over $119,000.
*Above is only one of the regulatory disciplinary actions filed against Kovack Securities by FINRA. There are at least 3 more SEC, FINRA, NASSA, and/or state securities regulator investigations and enforcement actions reported on BrokerCheck as regulatory disciplinary proceeding disclosures.
Kovack Securities Inc. Customer Complaints
There have been hundreds of complaints filed against Kovack Securities stockbrokers and investment advisors over the years. We have launched a number of investigations of current and former Kovack Securities advisors, including:
- Travis Tupper of Kovack Securities
- Shlomo Strugano of First Allied Securities, Inc and formerly with Kovack Securities
- Kent Amos of Kovack Securities
- Andrew Corbman formerly with Newbridge Securities and Kovack Securities
- Susan Penney of Kovack Securities
- Jonathan Fike of Kovack Securities
- Sandra McKoy of Kovack Securities
- Andrew Scheirer of Purshe Kaplan Sterling Investments
If you have lost money investing with these Kovack Securities advisors or others within this brokerage firm, it’s important that you reach out to an investment loss attorney quickly because the statutes of limitations can bar your claims. Call us at 800-732-2889.
Why Does Kovack Securities Inc. Have So Many Regulatory Problems And Customer Complaints?
Independent broker-dealers are notorious for their lax supervisory practices and procedures. The business model of these franchise type operations is to open many offices nationwide for steady growth of fixed monthly revenues without the costs attendant to a full-service branch office with on-site manager, compliance officer and operation personnel. The registered representatives of these independent broker-dealers generally operate as separately incorporated businesses. They are not employees of the broker-dealer and therefore not controlled in the same manner as full-service brokerage firm representatives. The registered representatives control their structure and costs to maximize profits and often leave the protection of investors’ rights and interests as their lowest priority.
The typical supervisory organization of independent broker-dealer operations is to have other independent contractors operate Offices of Supervisory Jurisdiction (OSJs) to monitor the registered representatives from geographically remote offices and then report to the main franchisor’s compliance office at national headquarters. The supervisors at the OSJs are not employees of the franchisor and often run their own brokerage, insurance and other businesses. They are not devoted full-time supervisors of the smaller branch offices. Consequently, OSJ managers cannot and do not supervise the day-to-day operations of the registered representatives of these Independent broker-dealers.
Generally, there is no immediate review of new accounts opened, securities transactions, business records, cash or securities receipts and deliveries, correspondence and business activities unrelated to the securities brokerage operation at these independent brokerage firms. The lax supervision leaves investors who have transferred their accounts to the smaller independent broker-dealer vulnerable to sales of securities that have not been reviewed or authorized by anyone other than the sales representative earning a commission. There may be no one onsite to detect forgeries of clients’ signatures on documents, the placement of inaccurate information about a client’s investment objectives and financial condition to document the suitability of a particular investment recommendation. Oftentimes there is no daily review of sales literature and client correspondence to protect against misrepresentations and misleading statements being made to investors. In fact, it is not unusual for there to be only one compliance audit visit per year at many of these offices.
These Independent brokerage business operations are worrisome to the North American Securities Administrators Association (NASAA), which has documented more instances of sales abuse and consequently investor losses at these firms than the traditional brokerage firms with branch offices with on-site managers and compliance personnel.
Did Kovack Securities Inc. Advisor Misconduct Cause You Investment Losses?
When financial advisor misconduct has caused you to lose substantial value to your investment accounts, you have the right to seek reimbursement from the responsible parties. Kovack Securities is responsible like any employer for its financial advisors acts and omissions. In addition, it has an independent duty to supervise its stockbrokers and investment advisors. These cases can be extremely complex, and so having the support of a reputable attorney who is experienced in recovering investment losses for investors is key to your success. Many customers make the mistake of contacting Kovack Securities without representation with an attorney about their complaints and have their complaints denied.
Consult With An Attorney Who Recovers Investment Losses Caused By Kovack Securities, Inc. Today!
The attorneys at The Law Offices of Robert Wayne Pearce, P.A., have helped countless investors over the last 40 years recover the losses from their investment accounts that were caused by broker negligence or misconduct. The firm has extensive experience with Kovack Securities cases, and Attorney Pearce is committed to seeing that those responsible for the losses you have suffered are held fully accountable.
Give us a call at 800-732-2889. Let’s discuss your case and see what we can do to help you get the compensation you need and deserve.