The Financial Industry Regulatory Authority (FINRA) recently announced Kai Chen (Chen) entered into a Letter of Acceptance, Waiver and Consent without admitting or denying the allegations. The settlement concerns allegations Chen effected numerous discretionary transactions without written authorization in many of his customers’ accounts. As a result, Chen was suspended from the financial industry for two months and fined $10,000.
Chen (FINRA CRD No. 2916984) is an associated person registered with FINRA since 2001. From 2003 to November 2013, Chen worked for Credit Suisse Securities (USA) LLC (“Credit Suisse”). Thereafter, from 2013 to 2015, Chen worked for S F Sentry Securities, Inc. Chen is no longer associated with any FINRA-member firm; however, Chen remains subject to FINRA’s disciplinary jurisdiction.
FINRA’s Department of Enforcement investigated Chen’s alleged misconduct and found he exercised discretion and unauthorized trades in many of his customers’ accounts in from January through June 2013. According to FINRA, Chen participated in 99 purchases of Syndicate Shares for 18 different customer accounts in 38 different initial public offerings of securities, as well as 38 sales of Syndicate Shares in 13 different customer accounts in connection with 18 different initial public offerings.
Based upon the foregoing misconduct, FINRA alleged Chen violated FINRA Rule 2010 and NASD Rule 2501(b). For example, NASD Rule 2510 prohibits a registered representative from exercising any discretionary authority in a customer’s account unless such customer has provided prior written authorization and the account has been accepted by a FINRA member. In cases where a financial advisor executes unauthorized trades without proper authorization, the financial advisor and brokerage firm may be found liable, as well as disciplined by securities regulators such as the case here.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages with Chen through Credit Suisse, you may be able to recover your losses through FINRA arbitration. Please contact us for a free, no-commitment initial consultation or contact one of our attorneys at (800) 627-2179 to schedule a free consultation or complete our free case evaluator.