← Broker database 2025-09-22
Clark James Kline Suspended Two Years for Causing Negative Brokerage Balance
According to FINRA, Clark James Kline was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two years for making payments from funds credited to his brokerage account knowing his bank account lacked sufficient funds to cover the transfers.
Kline made payments totaling approximately $180,000 from funds initially credited to his brokerage account as a result of multiple transfers sent from his personal bank account, when he knew that his bank account lacked funds to cover the transfers. He paid ongoing expenses from the transfer amounts initially credited to the brokerage account before his firm reversed the transfers due to insufficient funds in his bank account.
Kline's conduct caused a negative balance in the brokerage account, approximately $52,000 of which he has failed to repay to date.
This conduct is sometimes referred to as "check kiting" when it involves bank accounts, and it takes advantage of the time between when funds are credited to an account and when the underlying transfer is verified. By knowingly initiating transfers without sufficient funds and then spending the credited amounts before the transfers failed, Kline effectively obtained money he was not entitled to receive.
This type of conduct violates FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade. The two-year suspension reflects the seriousness of the misconduct, particularly given that Kline has not repaid the outstanding balance.
The suspension is in effect from October 6, 2025, through October 5, 2027. This case serves as a reminder that securities professionals are held to high ethical standards, and conduct that would constitute financial impropriety in other contexts is particularly serious in the securities industry.