Michael J. Kmetz (Kmetz) was barred by the Financial Industry Regulatory Authority (FINRA) over allegations concerning the sale of securities away from his member firm involving an elderly customer by accepting a bar from the securities industry.
On February 15, 2013, FINRA sent a letter to Kmetz requesting that he appear for testimony in connection with a complaint from an elderly investor who alleged that Kemtz had engaged in a variety of business activities and transactions. The customer’s complaint alleges that Kemtz sold securities away from Park Avenue. On March 12, 2013, Kemtz advised FINRA that he would not cooperate with the regulator’s requests for documents or testimony. Consequently, Kemtz was barred from the securities industry.
The accusations made against Kemtz are consistent with a “selling away” violation. Selling away occurs when a securities broker solicits securities that are not approved by the broker’s affiliated firm. Selling away is prohibited under FINRA Rule 3040, as well as other securities laws. The most common securities products solicited in selling away schemes are private placements and promissory notes.
Typically, the investor is not aware that the broker is acting outside of the normal securities channels. The investor is often provided with false account statements or confirmations that contain values that the broker can manipulate and control. In other cases, the broker will have the investor open a self-directed account that helps the broker cloak the illegitimacy of the investment by having a third-party prepare statements and distribute income payments. However, these account statements are also misleading to investors because the broker has complete discretion to stop or alter payments and values.
Kmetz was a registered representative at PFS Investments, Inc. from July 16, 2001 to March, 13, 2003. From February 25, 2003, to December 31, 2003, Kemtz was a registered representative at Cadaret, Grant & Co., Inc. Afterward, from January 12, 2004, to December 7, 2005, Kmetz was associated with Carillon Investments, Inc. Finally, from December 5, 2005, until June 30, 2011, Kmetz was associated with Park Avenue Securities, LLC (Park Avenue). According to FINRA records Kmetz also owned MJK Consulting, a purported database managing and consulting company.
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