On October 16, 2013 FINRA barred David C. Key from association with any FINRA member in any capacity. Without admitting or denying the findings, Mr. Key consented to the sanction by submitting a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. David Key was a registered Principal with PFS Investments Inc. (PFSI, also known as “Primerica Financial Services”) located at 3636 S. Sherwood Forest Blvd. Suite 500 in Baton Rouge, Louisiana 70816.
Key is Accused by FINRA
David C. Key was accused by FINRA for converting approximately (read: at least) $308,000 from member firm customers and using the funds to repay gambling debts. According to the AWC, between March 2011 and February 2012, while employed with PFS Investments Inc., Mr. Key improperly used seven PFSI customers’ funds for his personal use. David Key then failed to cooperate with FINRA’s requests that he appear and provide testimony on two separate occasions.
At least seven customers gave David C. Key checks to invest into PFSI investment products. The checks were personal checks and bank checks, ranging from $27,000 to $136,000 from a single customer. The funds came from both outside accounts and existing PFSI accounts. The customers were led to believe that their checks were being invested into products recommended by David Key and PFSI. Instead Mr. Key used the funds personally, to repay debts. One customer received a fictitious correspondence, from Key, on PFS Investments letterhead thanking the customers for their recent investments and stating that, “a total of $80,000 has been invested. With a guarantee of 20% which equals $96,000.”
Instead of investing his customers’ funds in Firm products, Key used the funds to repay gambling debts. According to an online poker player profile for David Key on PokerPages.com, Key has $31,248 in winnings between 2009 and 2012. Sadly it does not show his losses, which he allegedly funded by converting approximately $308,000 from customer accounts. By Converting over $300 thousand from seven PFSI customers, and improperly using the funds for his own personal use, Key violated FINRA rules 2150(a) and 2010.
Violations:
- Conversion is “any unauthorized act which deprives an owner of his property permanently or for an indefinite time” or the “unauthorized and wrongful exercise of dominion and control over another’s personal property, to exclusion of or inconsistent with rights of the owner.”
- FINRA Rule 2010 states that a member “in the conduct of his business, shall observe high standards of commercial honor and just and equitable principles of trade.”
- FINRA Rule 2150(a) states “no member or person associated with a member shall make improper use of a customer’s securities or funds.”
David C. Key was a registered broker with PFS Investments Inc. from July 2007 and May 2012. According to Key’s resume on indeed.com, he quickly ascended the ranks of PFSI. “I was the states leading cash flow representative and got promoted to a district manager. I was then promoted to division manager where I was now responsible for 3 district managers.” Key states that he “had the responsibility to contact clients that haven’t been contacted in 15 or more years and within 2 minutes of being on the phone with them have them like and trust [him] to quickly review some of their financial positions.” He boasts that “while a division manager in the state of Louisiana only 1 month out of 4 years did anybody in the state beat [him] in cash flow due to the well roundedness of [his] knowledge and sales skills of [PFSI’s] products.”
Firm’s Duty to Protect Clients
Firms like PFSI have a duty to protect their clients’ accounts from potentially predatory sales tactics which Key seems to pride himself on, protecting unsuspecting customers from the sale or recommendation of securities that are unsuitable or too risky for them. It is Primerica’s duty to preform due diligence in monitoring the management of customers’ accounts. Had PFSI managed their duties properly, more than likely, a routine investigation within PFSI would have alerted supervisors of the mismanagement of customer funds. Some of the checks came from existing PFSI accounts, and could have been monitored or tracked by PFSI, alerting management immediately. Key’s conduct continued for over a year before his Firm became aware of his actions; over this time period Mr. Key was able to convert a known $308,000 from unsuspecting investors.
If you had investments with David C. Key, or the PFS Investments branch in Baton Rouge, Louisiana, your investment accounts should be reviewed by a professional to determine if they have been affected by David Key’s unauthorized bank account transfers or securities transactions.
Guiliano Law Group
Our Practice is limited to the representation of investors in claims against stockbrokers and investment professionals for fraud, the sale of unsuitable investments, breach of fiduciary duty, failure to supervise. National Practice. Contingent Fee. Free Consultation. If you have suffered losses a the result of the recommendation of inverse and leveraged ETFs by your stockbroker or investment professional and were unaware of the risk associated with these securities, contact us for a free confidential evaluation at (877) SEC-ATTY.
