Former Sandlapper Financial advisor, Kyusun Kim (Kim), recently faced a department of enforcement action in connection with his recommendation of unsuitable non-traded Real Estate Investment Trusts (“REITs”) and structured notes from 2008 to 2015. As a result of the enforcement action, Kim was barred from the financial industry.
Kim (FINRA CRD No. 2817701) entered the financial industry in 1997 as general securities representative. From 2006 to 2016, Kim worked for Independent Financial Group, LLC, where the unsuitable transactions occurred. Thereafter, Kim worked for Sandlapper Securities, LLC (“Sandlapper”). Kim was terminated from Sandlapper as a result of the FINRA disciplinary action and lifetime ban. Kim’s FINRA BrokerCheck report discloses 25 negative disclosures, including 23 customer complaints related to the misconduct discussed below.
FINRA’s Department of Enforcement investigated Kim’s alleged misconduct and found while he was associated with IFG he recommended that numerous retirees and near retirees liquidate their 401(k) and other pension plans in order to invest in risky and speculative non-traded REITs and structured products. According to FINRA, Kim’s customers all had conservative or moderate investment objectives and risk tolerances.
Based upon the foregoing alleged misconduct, FINRA found Kim violated FINRA Rules 2010 and 2111. Under FINRA Rule 2111, registered representatives are required to recommend suitable investments and investment strategies to their clients (known as the suitability rule). Typically, a claim for unsuitable investments is brought as a form of a negligence claim with the theory: the representative had a duty to recommend suitable investments; the representative breached the duty with unsuitable investments; and the representative’s unsuitable investments caused the investor damages.
Here, Kim’s recommendations to these investors were unsuitable for many reasons, but mainly because non-traded REITs and structured products are speculative and illiquid, which is inconsistent with the customers’ conservative investment objectives and risk tolerances. In addition, Kim’s recommended the customers overconcentrate their retirement assets and liquid net worth in speculative and illiquid investments. Finally, Kim failed to disclose to his customers the risks associated with these products, including that the securities were speculative and illiquid.
Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.