Kyusun Kim of San Diego California a stockbroker formerly registered with Independent Financial Group LLC has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that that he (1) made unsuitable investment recommendations to the firm’s senior customer base and (2) falsified information about customers’ account profiles. Letter of Acceptance Waiver and Consent No. 2017052705001 (Apr. 26, 2018).
According to the AWC, from 2008 to 2015, during the time that Kim was associated with Independent Financial Group LLC, he solicited pre-retirees and retired individuals to effect liquidations from their pension plans and 401(k) retirement accounts so that the funds could be invested within Independent Financial Group LLC. Evidently, those customers had been advised by Kim to invest in structured notes, non-traded real estate investment trusts and other alternative investments. Apparently, those customers lacked experience or had not bought alternative investments prior to their involvement with Kim. The AWC further detailed that customers investing in those products had conservative-to-moderate objectives for investing and tolerances for risk.
The AWC stated that recommendations made by Kim were not suitable for the firm’s customers because of the illiquidity and speculative nature of those investments failing to conform to customers’ tolerances for risk and objectives for investing. The AWC stated that customers maintained an unnecessary concentration of their liquid net worth and retirement assets in the illiquid and speculative investments as a result of Kim’s investment recommendations.
In one case, a seventy-one-year-old customer with a moderate tolerance for risk was advised by Kim to liquidate the customer’s pension and 401(k) so that the proceeds could be utilized for structured notes and real estate investment trust products. Evidently, seventy-five percent of the customer’s liquid net worth had been placed into the structured notes and non-traded real estate investment trusts. In another case, a seventy-two-year-old customer with a conservative tolerance for risk was advised by Kim to liquidate a pension and utilize the proceeds for structured notes. As a consequence, half of that customer’s liquid net worth had been placed in illiquid and speculative securities.
The AWC stated that customers had not been made aware of the risks pertaining to those alternative investments; they were not informed about the illiquid and risky nature of those securities. The customers sustained catastrophic losses stemming from Kim’s investment recommendations. FINRA concluded that Kim’s conduct was violative of FINRA Rules 2010 and 2111 as well as National Association of Securities Dealers (NASD) Rules 2110 and 2310.
The AWC additionally stated that Independent Financial Group imposed limitations on the amount of the customer’s net worth that could be invested in the investments recommended by Kim. The AWC revealed that Kim side-stepped the firm’s supervisory protocols by inflating customers’ liquid net worth as well as their experience with investing. Consequently, Kim’s conduct was violative of FINRA Rules 2010 and 4511 as well as National Association of Securities Dealers (NASD) Rule 2110 and 3110.
FINRA Public Disclosure confirms that Kim is referenced in twenty-three customer initiated investment related disputes containing allegations of his misconduct while employed by Independent Financial Group and Lincoln Financial Advisors. Particularly, a customer initiated investment related civil action involving Kim’s activities was resolved for $100,000.00 in damages based upon accusations that the customer’s signature had been forged by Kim on insurance documentation. Civil Action No. LACV022369 (Dec. 5, 2017).
Thereafter, a customer initiated investment related arbitration claim involving Kim’s conduct was settled for $690,000.00 in damages founded on allegations of misrepresentation and suitability pertaining to structured notes, mutual fund investments, direct participation programs, real estate investment trust product and variable annuity investments. FINRA Arbitration No. 15-00179 (Dec. 21, 2015). Subsequently, a customer initiated investment related arbitration claim regarding Kim’s activities was resolved for $90,000.00 in damages supported by accusations that omissions and misrepresentations had been made regarding mutual fund and direct participation program investments; fiduciary obligations had been breached; and unsuitable transactions had been executed in the customer’s investment account. FINRA Arbitration No. 16-00425 (Jan. 24, 2017).
Thereafter, a customer initiated investment related arbitration claim concerning Kim’s conduct was settled for $1,345,000.00 in damages based upon allegations including financial elder abuse, misrepresentation, suitability and negligence. FINRA Arbitration No. 16-01657 (Jan. 30, 2017). Further, a customer initiated investment related arbitration claim involving Kim’s activities was resolved for $175,000.00 in damages founded on accusations that federal and state securities laws were violated in reference to structured products, direct participation program investments, and mutual funds. FINRA Arbitration No. 17-00408 (Feb. 21, 2018).
Kim’s registration with Independent Financial Group LLC has been terminated as of March 21, 2016. Between March 21, 2016 and April 18, 2017, Kim was employed by Sandlapper Securities, LLC.
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