Christopher Booth Kennedy of Woodland Hills, California, a stockbroker registered with Western International Securities, is the subject of an enforcement action initiated by the Financial Industry Regulatory Authority (FINRA) in which the regulator is seeking sanctions against Kennedy based upon allegations that Kennedy engaged in churning of customer accounts. Department of Enforcement v. Christopher Booth Kennedy, Complaint No. 2021072389001 (September 22, 2023).
According to the Complaint, from July of 2020 to July of 2021, Kennedy engaged in excessive trading in the accounts of six customers, resulting in over 5,300 trades that amounted to net trading of more than $350,000,000.00. This trading pattern purportedly led to an average of 102 transactions per account each month ($6,900,000.00 per account). By allegedly trading at approximately thirteen times the customers’ average account value, customers’ accounts experienced annual cost-to-equity ratios ranging between 27 percent and 39 percent, with an overall average cost-to-equity ratio exceeding 31 percent across all customers’ accounts.
The Complaint alleged that Kennedy’s trading practices led those six customers to collectively lose over $2,300,000.00 in account value. They also paid at least $715,000.00 in total trading costs and margin interest, including commissions exceeding $595,000.00.
Furthermore, the complaint alleges that in March of 2021, Kennedy began producing false account statements to conceal his trading results from two of the customers, who were co-trustees of a family trust account. Over the following six months, he purportedly distributed six false account statements to these two customers from his personal email. For example, the Complaint alleges that in August 2021, he sent a fake account statement showing that the customers had a $5,200,000.00 account balance. The statement showed a gain of at least $3,000,000.00 since July of 2020. However, under Kennedy’s control, the account had allegedly dwindled to $160,000.00.
In FINRA’s investigation, Kennedy purportedly provided false statements, denying the creation of any deceptive account statements and further claiming that his personal email was hacked, suggesting an imposter sent the fake statements.
FINRA Department of Enforcement alleges that Kennedy violated Securities Exchange Act of 1934 Section 10(b) and SEC Rule 10b-5, along with FINRA Rules 8210, 2010, and 2020.
FINRA Public Disclosure shows that Kennedy was referenced in a customer initiated investment related complaint that was settled on November 29, 2021, for $36,870.52 in damages. This complaint stemmed from allegations that Kennedy mishandled the customer’s account in connection with the sale of options when Kennedy was associated with Western International Securities Inc.
On March 2, 2022, a customer initiated investment related complaint involving Kennedy’s conduct was settled for $125,000.00 in damages based upon allegations that Kennedy breached his fiduciary duties, engaged in unauthorized trading, and breached of contract in connection with the sale of options when Kennedy was associated with Western International Securities Inc.
Kennedy is referenced in a customer initiated investment related FINRA securities arbitration claim in which the customer requested $2,453,936.28 in damages based upon allegations that Kennedy engaged in unauthorized trading in options and equities. FINRA Arbitration No. 22-02385 (October 31, 2022).
On June 9, 2023, another customer initiated investment related FINRA securities arbitration claim involving Kennedy’s conduct was settled for $75,000.00 in damages based upon alleged misrepresentation, unsuitable trading, and breach of fiduciary duty in connection with the sale of options and stocks. FINRA Arbitration No. 22-01248. Also on June 9, 2023, a customer initiated investment related complaint involving Kennedy’s conduct was settled for $375,000.00 in damages based upon allegations that Kennedy engaged in unauthorized trading.
Kennedy was associated with Western International Securities Inc. in Woodland Hills, California from December 2, 2019, to September 27, 2021; Spartan Capital Securities LLC in New York, New York from July 10, 2019, to December 23, 2019; and Western International Securities Inc. in Tarzana, California from August 21, 2017, to July 10, 2019.