Todd Kimm of Syracuse, New York, a stockbroker formerly registered with Merrill Lynch, Pierce, Fenner & Smith Incorporated, has been fined $5,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he exercised discretion in customer accounts without authority, and placed unsuitable trades in customer accounts. Letter of Acceptance, Waiver and Consent, No. 20140415872-01 (Jan. 3, 2018).
According to the AWC, between July of 2010 and July of 2013, Kimm made recommendations for one-hundred trades to be effected in customer JPT’s account on a short-term basis even though the investments were designed for long-term holding periods. Apparently, Kimm made recommendations on several occasions for JPT to sell municipal bonds not long after they had been purchased. The AWC stated that those municipal bonds contained hefty commissions, and meant for investors that had long-term investment horizons.
The AWC revealed that Kimm additionally pursued a short-term trading strategy with JPT’s assets involving the use of mutual funds and closed-end funds. Most of the funds were comprised of municipal bonds that produced income, and were meant to be held long-term. Kimm also reportedly executed class A mutual fund share trades, where those shares were designed for investors with long-term investment horizons in consideration of the substantial front-end charges.
Kimm reportedly recommended for JPT to sell class A mutual fund shares, closed-end funds and municipal bonds inside of the year that those investments were purchased. Particularly, the AWC revealed that Kimm pushed for trades to be executed when JPT only held the securities for three months. FINRA concluded that Kimm’s short-term trading scheme was not suitable for JPT or any other customer for that matter.
The AWC also indicated that when JPT’s class A mutual fund shares were sold, those proceeds would be utilized to buy other class A mutual fund shares. Apparently, Kimm made recommendations in this manner on eight occasions; mutual funds were sold to buy other funds with the same or very similar assets and objectives for investing. JPT reportedly accrued $200,000.00 in losses by way of Kimm’s unsuitable trading. Kimm’s conduct was found by FINRA to be violative of FINRA Rules 2010, 2111, NASD Rule 2310 as well as Municipal Securities Rulemaking Board (MSRB) Rules G-17 and G-19.
The AWC further revealed that securities transactions had been executed on a discretionary basis by Kimm. Yet, the customer never provided written information enabling Kimm to effect those trades beforehand. Further, the firm did not authorize JPT’s account for Kimm’s exercise of discretion. Consequently, FINRA found that Kimm’s unauthorized trading was violative of FINRA Rule 2010 and NASD Rule 2510(b), as well as MSRB Rule G-19(d).
FINRA Public Disclosure confirms that Kimm has been identified in two customer initiated investment related disputes containing allegations of Kimm’s improper conduct during the time he was associated with Merrill Lynch. Particularly, on November 18, 1999, a customer filed an investment related written complaint involving Kimm’s conduct, where the customer sought $15,946.83 in damages supported by accusations that Kimm effected the purchase of variable annuities that were not suitable for the customer.
Additionally, a customer initiated investment related arbitration claim regarding Kimm’s activities was resolved for $775,000.00 in damages founded on allegations that Kimm effected unauthorized and excessive trades in the customer’s account, and made unsuitable stock recommendations to the customer. FINRA Arbitration No. 14-01321 (Feb. 18, 2015).
Kimm’s registration with Merrill Lynch was terminated on September 12, 2014. He was later employed with Commonwealth Financial Network between September 11, 2014 and December 31, 2017.
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