Abstract：The Financial Industry Regulatory Authority (FINRA) has imposed a $150,000 fine on Kingswood Capital Partners, LLC, after finding supervisory and compliance failures related to the sale of illiquid alternative investments to senior clients.
The Financial Industry Regulatory Authority (FINRA) has imposed a $150,000 fine on Kingswood Capital Partners, LLC, after finding supervisory and compliance failures related to the sale of illiquid alternative investments to senior clients.
According to FINRA, between March 2019 and June 2019, Kingswood failed to reasonably supervise a former registered representative who recommended illiquid alternative investments to three senior customers. These recommendations raised suitability concerns, particularly given the complexity and liquidity risks associated with such products and the vulnerability of senior investors.
In addition to supervisory shortcomings, FINRA found that Kingswood did not establish or maintain written supervisory procedures reasonably designed to ensure compliance with suitability requirements for alternative investments. As a result, the firm failed to put in place adequate safeguards to monitor and control recommendations involving higher-risk products.
FINRA determined that these deficiencies constituted violations of FINRA Rule 3110, which requires member firms to establish and maintain a system to supervise the activities of associated persons, as well as FINRA Rule 2010, which mandates high standards of commercial honor and just and equitable principles of trade.
As part of the settlement, Kingswood agreed to pay the $150,000 fine and accept a formal censure. The firm neither admitted nor denied the findings, a standard provision in FINRA disciplinary actions.
Kingswood Capital Partners has been a FINRA member since 2018 and is headquartered in San Diego, California. The firm operates a general securities business and employs approximately 200 registered representatives across 67 branch offices.
The action underscores FINRAs continued focus on protecting senior investors and ensuring that broker-dealers maintain robust supervisory systems, particularly when recommending complex and illiquid investment products.
