Kevin Cory of New York, New York, a stockbroker registered with RF Lafferty Co. Inc., has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Cory made misrepresentations and omissions of material fact. Letter of Acceptance, Waiver, and Consent No. 2022073802901 (May 26, 2023).
According to the AWC, on December 22, 2021, Chapin Davis submitted a Form U5 about Cory, revealing that two of Cory’s past customers from Chapin Davis sued Cory. They claimed that Cory had convinced them to put their retirement savings into a limited partnership he created secretly, without the company’s awareness or approval. Soon after, on February 10, 2022, RF Lafferty submitted a Form U5, confirming that Cory had willingly ended his employment with them.
FINRA determined that in February of 2014, a married couple, who were customers of Chapin Davis, put $500,000.00 of their retirement money into a supposed investment fund formed and controlled by Cory. Cory wrote the fund’s investment document, promising that the fund’s plan was to put money into worldwide stocks. But instead of doing that, Cory used the customers’ money to lend to various small businesses, some of which Cory owned or were managed by his colleagues and friends. The small businesses, including Cory’s, could not pay back the loans from the fund. By the end of 2016, the fund was empty and its business licenses were cancelled due to unpaid taxes.
Starting in 2017, when Cory began working with RF Lafferty, the customers regularly asked Cory about their investment and requested investment account reports.
From November of 2018 to July of 2019, Cory made and sent two fake account reports to the customers, falsely claiming that their investment in the fund had grown when it was actually worth nothing.
For instance, on November 11, 2018, after the customers asked for an account report, Cory gave them a report claiming that as of October 31, 2018, their investment in the fund had a net asset value of $667,676.00.
Cory also lied and left out important details about the customers’ investment in the fund in 14 text messages to them from November of 2018 to August of 2020. In these texts, Cory lied about important details concerning the value of their investment in the fund, the fund’s loans to businesses, and Cory’s attempts to collect overdue loans. Cory falsely said that others, not him, were in charge of creating the fund’s financial data.
For instance, on September 27, 2019, replying to the customers’ question about when they would see an investment return, Cory told them that he was just trying to close out the loans, should receive $100,000.00 soon, and was working on the other two loans. But in reality, Cory was not closing out the loans and had no expectation of receiving money from borrowers as he described.
Cory failed to mention in his messages to the customers that the fund was broke and defunct as a business entity.
Therefore, FINRA found that Cory violated Rule 2010.
The regulator also said that in fake account reports and text messages, Cory lied to his customers about their investment in the fund. Cory falsely said that the customers’ investment in the fund had increased in value, when it was actually worthless, and lied about the fund’s loans to businesses. When he made these communications, he knew they contained false information and were misleading. Therefore, Cory violated FINRA Rules 2210 and 2010.
FINRA Public Disclosure shows that Cory is also referenced in a customer initiated investment related civil action that was settled for $250,000.00 in damages based upon allegations that Cory used customer funds to pay for living expenses instead of investing in a limited partnership on behalf of the customer during the time that Cory was associated with Chapin Davis. Civil Action No. C-03-CV-20-003463 (June 1, 2022).
Cory’s stockbroker registration with RF Lafferty Co. Inc. was terminated on February 10, 2022.
