Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Kimberly Kitts (Kitts), formerly associated with Royal Alliance Associates, Inc. (Royal Alliance) in Palmer, Massachusetts was terminated for cause by Royal Alliance concerning allegations that she engaged in misappropriation of funds. Royal Alliance stated that it received correspondence from a client that Kitts had converted or misappropriated funds. In addition, Kitts has been subject to four customer complaints.
In December 2017, FINRA barred Kitts from the securities industry when she failed to respond to requests for information concerning her activities.
At this time it is unclear the extent and nature of Kitts’ alleged misappropriation of funds, outside business activities, or private securities transactions. Kitts disclosed a number of outside business activities including Marquis Consulting which is described as an investment related activity involved in business valuation. Kitts also disclosed involvement as a trustee for an estate and also a volunteer for a non-profit company called Center for Coastal Studies.
The allegations concerning conversion are often accompanied by claims of engaging in outside business activities and private securities transactions – a practice known in the industry as “selling away” – a serious violation of the securities laws.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. When advisors convert or misappropriate funds they often created businesses or other vehicles to serve as a cover for the theft of funds. Firm attempt to disclaim liability for the theft of funds by their brokers by claiming ignorance of their advisor’s activities. However, federal securities laws and the FINRA rules require firms to monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Kitts entered the securities industry in 1997. From April 2004 until November 2017, Kitts was associated with Royal Alliance out of the firm’s Palmer, Massachusetts office location.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.