According to FINRA, Suresh V. Kumar was barred from the securities industry in an Order Accepting Offer of Settlement based on extensive misconduct including operating an undisclosed outside business, making material misrepresentations, and providing false information to FINRA.
Kumar operated an undisclosed outside business activity where he directly received hundreds of thousands of dollars from proprietary traders. He promised to train participants to pass the Series 57 examination, teach them to trade securities as part of his purported team at his member firm, and double the value of their initial trading deposit. Participants had to make deposits into a contingency fund, with refund rights if they discontinued the program before passing the exam.
One participant requested return of his $48,000 contingency fund deposit after failing the exam and deciding not to continue. Kumar was obligated to repay this money but instead made material misrepresentations about why he couldn't. He falsely told the participant that his member firm held $100 million of his money and he couldn't repay the participant until the firm released his funds. In reality, Kumar had less than $2,500 with the firm and had already spent the participant's deposit on personal expenses and loan repayment.
Kumar's violations extended far beyond this single misrepresentation. He failed to disclose his outside business activity to his firm despite it predating and continuing through his FINRA registration. He failed to disclose that he effected about 100 private securities transactions in accounts participants held away from the firm. He submitted a false attestation to his firm stating he had not conducted outside business, engaged in unapproved electronic communications, or engaged in private securities transactions.
During his on-the-record testimony, Kumar refused to answer certain questions about deals he claimed impacted his ability to repay participants. He provided false, misleading, and incomplete written responses to FINRA about the number of agreements he entered, copies of those agreements, and his bank accounts. He failed to provide electronic communications FINRA requested and made false statements about those communications. He even deleted electronic communications FINRA had requested. Finally, Kumar failed to identify an overseas bank account until nine months after FINRA requested the information and didn't provide statements for that account until ten months after the original request.
For investors, this case demonstrates how multiple forms of misconduct often occur together. Kumar's operation of an undisclosed training program led to misappropriation of participant funds, false representations, obstruction of the regulatory investigation, and deletion of evidence. Investors should be extremely wary of financial professionals who offer training programs or other services outside their registered firm activities, particularly when those activities involve taking money directly from participants.
