Finra Bars Broker Accused of Elder Ripoff and Coverup
A California broker with 19 years of experience allegedly engaged unsophisticated elderly clients with errant rollover advice, sold them high-risk products and lied about their net worth to his firm, a quartet of high-intensity issues that led to his banishment on Tuesday from the securities industry.
Kyusun Kim (aka Kyu Sun Kim and Kenny Kim, according to his BrokerCheck history) made unsuitable recommendations to “numerous senior customers” between 2008 and 2015 and inflated the net worth of several on new account forms and other documents “so that they appeared eligible to purchase certain speculative investments,” according to an acceptance, waiver and consent (AWC) letter signed by Kim and posted on the regulator’s enforcement website.
He also encouraged them to liquidate their 401(k) and pension retirement plans and use the proceeds to buy non-traded Real Estate Investment Trusts, structured notes and other alternative speculative and/or illiquid investments. “All of the customers had moderate or conservative investment objectives and risk tolerances,” the AWC says.
Kim, who accepted the bar without admitting or denying Finra’s findings, worked from February 2006 to March 2016 at Independent Financial Group in San Diego. From March 2016 to April 2017, he was affiliated with Sandlapper Securities, which the “Wall Street Journal” highlighted this week in an article about firms that work with rogue brokers who sell investments in high-risk private investments.
He has been the subject of 21 customer complaints since December 2007, included 11 that settled, one that was denied and nine that are pending, according to his BrokerCheck report. Kim, who first registered as a securities sales representative in 1997 with Lincoln National Life Insurance Co., could not be reached for comment through several publicly listed phone numbers that have been disconnected.
The Finra settlement letter said he violated its Rule 2111 requiring brokers to believe that recommended investments are suitable to a customer based on age, financial situation, investment experience, risk profile and other factors. Kim’s recommendations led his customers to suffer “substantial losses,” the AWC said.
It also said he violated Finra’s Rule 3110 on books-and-records accuracy by inflating net worth, liquid net worth and investment experience figures for certain customers to circumvent Independent Financial’s rules on account concentrations in alternative investments.
A spokeswoman at Independent Financial, which works with about 640 independent brokers, did not immediately respond to a request for comment on Kim’s tenure at the firm. Gilbert Boyce, a Washington, DC, lawyer who represents Sandlapper, also did not immediately return a request for comment on the firm’s decision to work with Kim.
said its sales practices reviews “will pay particular attention to suitability determinations in those situations where registered representatives recommend complex products to unsophisticated, vulnerable investors.”