← Broker database 2023-09-22
Christopher Kennedy Accused of Churning Customer Accounts and Making Fake Statements
According to FINRA, Christopher Booth Kennedy was named as a respondent in a FINRA complaint alleging that he churned and excessively traded customer accounts, made fake account statements, and lied to FINRA during its investigation.
The complaint alleges that Kennedy churned and excessively traded accounts of customers, using his control over these accounts to direct an excessive series of transactions that generated commissions for his own benefit at the customers' expense. Kennedy allegedly directed trades representing net trading of more than $350 million in the customer accounts. Each month, Kennedy allegedly made trades representing net trading of more than $6.9 million per account or approximately 13 times the average account value. As the alleged result of Kennedy's excessive trading, the customers collectively lost over $2.3 million in value from their accounts and paid more than $715,000 in total trading costs and margin interest, including over $595,000 in commissions.
By allegedly churning the customer accounts, Kennedy willfully violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and violated FINRA Rule 2020, and by allegedly excessively trading their accounts, he willfully violated Exchange Act Rule 15l-1 (Regulation Best Interest).
The complaint also alleges that Kennedy made fake account statements to hide the results of his trading from two customers, a husband and wife who were co-trustees of a family trust account. Over six months, Kennedy allegedly prepared and sent six fake account statements to the customers from his personal email. For example, Kennedy allegedly sent a fake account statement purporting to show an ending balance of $5.2 million and a gain in value of over $3 million when in fact, under Kennedy's alleged control, the account had lost nearly all of its value and only approximately $160,000 in value remained.
The complaint further alleges that during FINRA's investigation, Kennedy repeatedly lied to FINRA in response to its requests for information and on-the-record testimony. In particular, Kennedy allegedly falsely denied preparing any fake account statements and falsely claimed that his personal email had been hacked.
If proven, this would represent some of the most serious misconduct possible in the securities industry, including fraud, churning, and obstruction of a regulatory investigation.