David Quentin Kendrick of Shreveport Louisiana a stockbroker formerly registered with NYLife Securities LLC has been fined $30,000.00 and suspended for eighteen months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that (1) Kendrick took part in outside business activities without having informed his securities broker dealer employer and (2) Kendrick facilitated securities transactions outside of NYLife’s auspices and without the securities broker dealer’s knowledge. Letter of Acceptance Waiver and Consent No. 2018058397101 (Nov. 21, 2019).
According to the AWC, between November of 2011 and January of 2017, during the time that Kendrick was associated with NYLife, he was subject to NYLife’s written supervisory procedures which mandated that for any outside business activity that he intended on pursuing, he had to provide the securities broker dealer with notice and obtain permission. The AWC indicated that Kendrick was cognizant of the firm’s policies since he previously disclosed outside business activities.
Eight individuals – two with accounts at NYLife – joined Kendrick in November of 2011 for purposes of establishing an investment club known as TC. The AWC stated that TC was exclusively controlled and managed by Kendrick according to the Operating Agreement and other documents filed with Louisiana Secretary of State. The AWC stated that TC’s administrative and financial affairs were controlled by Kendrick. Investments were selected and purchased by him on TC’s behalf. Kendrick was also responsible for coordinating investor meetings.
It was not until August of 2015 that Kendrick notified NYLife about his involvement in TC. And at that time, the securities broker dealer was not made aware that Kendrick actually commenced activities involving TC in 2011; and that on TC’s behalf, Kendrick facilitated customers’ investments. Kendrick’s request to engage in outside business activities through TC was denied but that did not stop him from continuing to be involved. By January of 2017, the stockbroker was directed by NYLife to withdrawal from TC’s registration in Louisiana
FINRA determined that false statements had been made by Kendrick in regard to TC on at least six compliance questionnaires administered to him by NYLife. The regulator found Kendrick’s conduct violative of FINRA Rules 2010 and 3270.
In addition, the AWC stated that Kendrick sold away from NYLife. Between June of 2010 and May of 2018, Kendrick was subject to NYLife’s written supervisory procedures which forbade him from recommending, soliciting or facilitating securities transactions and private placements that were neither offered nor approved by the securities broker dealer. This prohibition did not stop Kendrick from taking part in as many as nine private securities transactions outside of NYLife’s auspices.
In fact, at least four of the securities broker dealer’s customers joined Kendrick in utilizing SCV – an investment vehicle – for one or more investments. $290,000.00 worth of investors’ purchases in three private placement investments had been solicited and recommended by Kendrick via SCV and TC, and purchases were effected with his assistance. According to the AWC, investment opportunities for members of SCV and TC had been recommended and solicited by Kendrick. Meetings regarding the investments were facilitated by him, and questionnaires and stock purchase agreements were completed for investors by him on TC’s behalf.
The AWC stated that Kendrick’s unpermitted activities had been detected by NYLife in March of 2018. While he was under NYLife’s internal investigation, Kendrick falsely told the securities broker dealer that he was only involved in TC through being a passive investor despite Kendrick being in control of TC’s activities and making private placement investments through the club. The securities broker dealer was led by Kendrick to believe that SCV was not established by him and that investors in SCV had not been solicited by him. In addition, NYLife received questionnaires from Kendrick containing false statements in regard to his involvement in the private securities transactions. FINRA found that Kendrick’s activities in this regard constituted violations of FINRA Rules 2010 and 3280 as well as NASD Rule 3040.
Kendrick was terminated by NYLife on May 17, 2018 supported by accusations of him selling away and engaging in outside business activities.
