Kevin L. Barbalace, of Columbia, Maryland, a stockbroker formerly associated with Dawson James Securities, Inc., has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that Barbalace made unsuitable recommendations to a firm customer. Letter of Acceptance, Waiver and Consent, No. 2015047757701 (Nov. 17, 2016).
According to the AWC, in July of 2014, customer SL opened an individual retirement account and non-retirement investment account through Barbalace. Apparently, from August of 2014 to February of 2015, forty-six trades within SL’s individual retirement account had been recommended by Barbalace, as were eight trades within the non-retirement account which SL held with the firm.
The AWC stated that the majority of the trades which Barbalace effected consisted of lower priced equities which had traded at five dollars per share or below. Apparently, several of the securities which had been recommended by Barbalace were extremely risky. For example, one of the low-priced stock’s value had declined by an estimated eighty percent within two months, while another lower priced stock declined in value by nearly fifty percent within a month.
FINRA stated in the AWC that trades effected by Barbalace caused SL’s account to be overconcentrated in lower priced stocks. SL reportedly suffered from at least $7,000.00 in losses by the time that SL closed out her accounts with Dawson James Securities. FINRA found that the recommendations made by Barbalace were not suitable for SL, and led the customer to be exposed to risks that were unacceptable when considering the situation SL was in and the needs that SL had communicated to Barbalace. As such, FINRA found that Barbalace’s conduct was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that Barbalace has been subject to six events concerning misconduct. Particularly, on March 30, 2015, a customer filed an investment related arbitration claim involving Barbalace’s conduct, in which the customer requested $5,500.00 in damages based upon allegations that Barbalace made unsuitable investment recommendations.
Subsequently, on October 13, 2015, a customer filed an investment related arbitration action pertaining to Barbalace’s conduct, in which the customer requested $50,000.00 in damages based upon allegations that Barbalace made misrepresentations to the customer concerning risks of a promissory note investment, and effected unsuitable transactions concerning such.
Dawson James Securities and Dawson James Asset Management terminated Barbalace on May 13, 2015, based upon allegations that Barbalace failed to inform his firm about a customer complaint, and solicited compensation from a customer pertaining to an outside business activity that had not been approved by the firm. Barbalace was subsequently registered with Corinthian Partners, L.L.C. from August of 2015 to June of 2016.
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