Eugene Hyunwook Kim (also known as Gene Kim), of Red Bank, New Jersey, a stockbroker registered with National Securities Corporation, is the subject of an enforcement action initiated by Financial Industry Regulatory Authority (FINRA) in which the regulator is seeking sanctions against Kim based upon allegations that Kim “misappropriated” funds. Department of Enforcement v. Eugene Kim, Complaint No. 2019064508802 (July 11, 2023).
According to the Complaint, from December 2017 to June 2019, Kim misused customer money related to a private placement offering organized by NSC. In December of 2017, Kim suggested to NSC’s decision-making committee that the securities broker dealer should start a private offering using an NSC-linked fund for shares in a private business (Company A) at a top price of $9.75 per share.
When he proposed the offering for approval, Kim allegedly hadn’t secured any source of shares for the offering. NSC gave the green light to the offering, and stockbrokers pitched to investors and shared offering documents claiming the only aim of the offering was to make investments in Company A shares at up to $9.75 per share. In the end, 48 customers collectively invested $4,055,000.00 in the offering, according to the Complaint.
FINRA alleged that before finalizing the offering, Kim had not sourced any Company A shares for the offering at any cost. Rather than giving the investors their money back, Kim supposedly finalized the offering and earned a $16,220.00 commission. Allegedly, Kim deceived NSC customers into concluding that the fund had bought Company A shares at the $9.75 price.
Ten months post the offering’s completion, Kim supposedly bought a small amount of Company A shares at an average cost of $20.22 — double the $9.75 top price-per-share. Still, at least $1,000,000.00 of investor money was still cash, as Kim couldn’t find shares to buy with the customers’ investments. Eventually, NSC discovered Kim’s wrongdoings and told investors that they hadn’t really bought shares of Company A at $9.75 per share. Allegedly, investors owned Company A shares at a higher cost and some investor funds were not used to buy any Company A shares. Therefore, FINRA alleges that Kim violated FINRA Rule 2010. There was no allegation that Kim converted funds to his personal use.
Kim was associated with National Securities Corporation as a stockbroker from June 9, 2015, to July 22, 2022, and associated with National Asset Management Inc. as an investment advisor representative from August 25, 2015, to July 22, 2022. He has been associated with Ceros Financial Services Inc. as a stockbroker since August 1, 2022.
