Kevin Marshall McCallum of Birmingham, Alabama, a stockbroker formerly registered with LPL Financial LLC, is referenced in a customer initiated investment related FINRA securities arbitration claim where the customer requested $725,650.00 in damages founded on allegations that the customer was overconcentrated in a business development company (BDC) when McCallum was registered with LPL Financial LLC. Financial Industry Regulatory Authority (FINRA) Arbitration No. 22-00132 (January 21, 2022). According to the claim, McCallum’s options trading also failed to align with the customer’s objectives for investing at LPL Financial.
FINRA Public Disclosure shows that McCallum has been identified in seven more customer initiated investment related disputes containing accusations of his activities while associated with LPL Financial LLC. McCallum is identified in a customer initiated investment related AAA arbitration claim in which the customer sought compensatory damages based upon allegations of unsuitable investment recommendations and overconcentration by McCallum relating to Medley Capital Corporation. AAA Arbitration No. 01-21-0001-1521 (February 25, 2021).
Another customer initiated investment related FINRA securities arbitration claim regarding McCallum’s activities was resolved for $70,000.00 in damages founded on accusations that unsuitable and unauthorized stock trades were made by McCallum at LPL Financial. FINRA Arbitration No. 19-03448 (January 4, 2021). The claim alleges that McCallum caused an overconcentration of the customer’s account in Medley Capital Corporation.
On August 19, 2021, a different customer filed an investment related FINRA securities arbitration claim involving McCallum’s conduct where the customer requested $4,000,000.00 in damages supported by accusations that from 2016 to 2018, McCallum made unsuitable trades in the customer’s account. FINRA Arbitration No. 21-01894. The claim alleges that the customer’s account was concentrated in a non-diversified closed-end management company.
McCallum is also the subject of a customer initiated investment related FINRA securities arbitration claim which was settled for $130,000.00 in damages based upon allegations of the customer’s account being overly concentrated in Medley Capital Corporation, resulting in losses. FINRA Arbitration No. 20-03421 (October 5, 2021). The claim alleges that McCallum provided bad advice to the customer between October of 2018 and December of 2018 concerning the closed-end fund.
On December 13, 2021, another customer initiated investment related complaint concerning McCallum’s conduct was resolved for $13,000.00 in damages supported by accusations of losses caused by McCallum’s discretionary trading and overconcentration of Medley Capital Corporation in the customer’s account between 2015 and 2019 while McCallum was associated with LPL Financial.
McCallum is also referenced in a customer initiated investment related FINRA securities arbitration claim that settled for $500,000.00 in damages founded on allegations of fraudulent transactions and unauthorized margin use as it pertained to exchange-traded funds, options, mutual funds, and stocks. FINRA Arbitration No. 19-01028 (January 4, 2021).
McCallum is identified in a different customer initiated investment related FINRA securities arbitration claim which was settled for $1,900,000.00 in damages based upon accusations of a non-diversified closed-end fund being unsuitable for the customer as it conflicted with the customer’s objectives for investing. FINRA Arbitration No. 20-03840 (March 16, 2022). According to the claim, discretionary trades were made by McCallum at LPL Financial between October of 2017 and December of 2018.
McCallum has been fined $25,000.00 and suspended for one year from associating with any FINRA member in any capacity supported by findings of his unsuitable recommendations of a high-risk business development company to investors. Letter of Acceptance, Waiver, and Consent No. 2019062569501 (June 17, 2021).
According to the AWC, twelve investors were recommended a BDC which was experiencing financial problems. Those investors were not aggressive: they had low-to-moderate risk tolerances. They also did not have any experience concerning BDC investments.
FINRA states that first and second lien secured loans, unsecured loans, and equity in companies had been held by the BDC McCallum recommended to customers. FINRA notes that the BDC was especially risky as it borrowed money, was illiquid, and was exposed to interest rate risk. This BDC declined in value between May of 2017 and June of 2019. During this period, customers were told by McCallum to invest between 17 percent and 60 percent of their liquid net worth in the alternative investment. The customers went along with McCallum’s recommendations only to experience losses. The AWC states that McCallum made unsuitable recommendations in violation of FINRA Rule 2111.
The AWC also states that McCallum provided customers with unbalanced information regarding the BDC, as the customers were not able to properly evaluate the risks of the investments. The regulator notes that exaggerated claims and forecasts were present in McCallum’s materials. In one instance, McCallum only communicated the benefits, not the risks, of investing in the BDC. He violated FINRA Rule 2210 for this reason.
McCallum was employed by LPL Financial between May 24, 2012, and July 5, 2019.
