Kyle P. Harrington, of San Diego, California, a stockbroker formerly registered with National Securities Corporation, has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that he converted a customer’s funds, sold away from his firm, and falsified documentation to FINRA in regard to his activities. Department of Enforcement v. Kyle P. Harrington, et al., No. 2015047303901 (June 23, 2017).
According to the Complaint, in August of 2012, an estimated $20,000.00 was converted by Harrington from customer, LD, via a wire transfer to an investment advisory that Harrington was affiliated with. Apparently, unbeknownst to the customer, the funds were routed to a checking account that Harrington controlled instead of being invested pursuant to the customer’s instructions. The Complaint stated that LD’s monies were ultimately used by Harrington to pay bills that he incurred in connection with running his business. FINRA Department of Enforcement alleged that Harrington’s conduct in this regard was violative of FINRA Rule 2010. Subsequent to FINRA learning of Harrington’s activities, he reportedly tried to cover his tracks in November 2016 to indicate that LD authorized his use of funds.
The Complaint alleged that Harrington utilized his assistant, Linda C. Milberger, to complete the conversion of LD’s funds. Particularly, a form that LD was previously duped into signing had been changed by Milberger without LD’s authorization to effect the transfer of all remaining assets in the customer’s account. Apparently, subsequent to altering the wire transfer documents, Milberger furnished them to National Securities Corporation as well as another entity. The Complaint alleged that Milberger’s activities triggered the records and books of the affected firms to contain erroneous entries. FINRA Department of Enforcement claimed that Milberger’s conduct was violative of FINRA Rules 2010 and 4511.
Moreover, the Complaint indicated that Harrington sold away from his firm in 2012 and 2013, in which he collaborated with two persons to obtain an estimated $276,000.00 via facilitating sales of three hundred thousand restricted stock shares issued by Islet Sciences, Inc. The transactions were purportedly never made known to National Securities Corporation by Harrington, nor were they authorized via the firm. Harrington’s private securities transactions were alleged by the Department of Enforcement to be violative of FINRA Rule 2010 and NASD Rule 2040.
Furthermore, the Complaint alleged that Harrington concealed the private securities transactions by way of furnishing bogus documentation to National Securities Corporation in July of 2014 during which time his business operations were audited. The payment Harrington obtained for selling Islet stock was reportedly mispresented by him to National Securities Corporation as compensation he received pursuant to a false vacation rental arrangement for real estate that he owned in California.
According to the Complaint, Harrington lied to FINRA staff in the course of FINRA’s investigation into allegations of his wrongdoing. In particular, Milberger was utilized by Harrington to falsify bank account documentation requested by FINRA so that the source of the payment to Harrington was obscured. Harrington further testified that the vacation rental agreements were real. The Department of Enforcement alleged that Harrington obstructed FINRA’s investigation in this regard; conduct violative of FINRA Rules 8210 and 2010.
Financial Industry Regulatory Authority (FINRA) Public Disclosure reveals that Harrington has been previously fined and suspended from associating with any FINRA member in any capacity based upon consenting to findings that he failed to make disclosures to FINRA concerning a bankruptcy filing. Letter of Acceptance, Waiver and Consent, No. 2011030176901 (Dec. 28, 2012). Harrington has also been identified in nine customer initiated investment related disputes containing allegations of his misconduct while employed with National Securities Corporation, Harrington Capital Management, LLC, Matrix Capital Group, Inc., CIBC Oppenheimer, and CIBC World Markets Corp.
Specifically, on January 3, 2017, a customer filed an investment related arbitration claim involving Harrington’s conduct, in which the customer requested $410,000.00 in damages based upon allegations against him of converting customer funds, breaching his fiduciary and contractual obligations, churning the customer’s investment portfolio, making investment related misrepresentations, effecting investment transactions that were neither suitable nor authorized by the customer, and ultimately committing fraud in regard to the customer’s private placements and over-the-counter equities transactions. On May 8, 2017, another customer filed an investment related written complaint regarding Harrington’s activities based upon allegations that he made unsuitable investment recommendations to the customer.
Harrington was fired from National Securities Corporation on November 18, 2016, based upon allegations that he converted a customer’s funds. He has been associated with Aurora Capital LLC since December 7, 2016.
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