Kevin J. Blaney, of Stamford, Connecticut, a stockbroker with Jefferies LLC, was fined $30,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after consenting to findings that he made misrepresentations to customers in connection with fixed income securities. Letter of Acceptance, Waiver and Consent, No. 20160499622-01 (Sept. 1, 2016).
According to the AWC, between January 1, 2009 and December 31, 2011, Blaney was the firm’s managing director for Jefferies LLC within the firm’s mortgage backed securities department. Blaney, in addition to his director role, reportedly sold the securities to investors in a sales capacity. The AWC stated that in six transactions that FINRA reviewed, Blaney was responsible for misstatements made by him and his subordinates to firm customers regarding fixed income securities.
Particularly, FINRA noted that customers received the wrong information from Blaney regarding the fixed income securities’ prices that Jefferies LLC had possessed or was capable of acquiring for such investors. Blaney also reportedly made misrepresentations regarding other bonds that investors considered making purchases of. FINRA noted that investors were told that Jefferies received assistance from sellers of fixed income securities in order to facilitate investor transactions, when in fact, Jefferies already possessed securities which prospective investors had considered.
FINRA provided examples in the AWC where Blaney misinformed customers as to the prices in which Jefferies purchased bonds. In one case, Blaney reportedly informed a customer who agreed to purchase bonds from Jefferies LLC at 8-08 that Jefferies purchased the bonds at 8-04, when the firm factually purchased the bonds at 7-16. In another instance, Blaney informed a customer that he would attempt to purchase bonds from a seller in return for a fee, when in reality the firm already owned the bonds when Blaney made such statements to the customer.
FINRA noted another instance in which one of the firm’s traders informed Blaney that the firm purchased bonds at a price point at 41-12, and sold the bonds to the customer at 42-08, where the customer was told by the representative that Jefferies purchased the bonds at 42-4. In this instance, Blaney apparently never took any steps to inform the customer regarding the misrepresentation.
FINRA found that Blaney’s numerous misrepresentations to customers were violative of FINRA Rule 2010. Public disclosure records reveal that prior to the FINRA disciplinary action, Jefferies LLC terminated Blaney on August 12, 2014, citing allegations of his aforementioned misconduct as the basis.
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