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Kestra Investment Services
Based out of Austin, Texas, Kestra Investment Services, LLC is a registered broker-dealer that was incorporated in 2014. Its parent company is Kestra Financial Inc., which is owned by private equity firms Warbus Pincus, LLC and Stone Point Capital, LLC. Kestra Private Wealth Services, LLC and Kestra Advisory Services, LLC are related entities.
With its offices of supervisory jurisdictions (OSJs), this brokerage firm gives independent brokers and financial advisors a platform through which they can run their own branch offices. These offices tend to be sparsely manned, including one broker-branches, with no manager on site.
This can make it challenging for Kestra to properly oversee its registered representatives. Unfortunately, failure to supervise can make it easy for broker misconduct and negligence to occur, both of which may lead to investment losses for customers.
Our broker misconduct attorneys represent customers of Kestra Investment Services wishing to pursue damages through Financial Industry Regulatory Authority (FINRA) arbitration. Contact Shepherd Smith Edwards and Kantas (SSEK Law Firm at investorlawyers.com) today.
Kestra Investment Services Brokers Have Come Under Fire for Customer LossesOne Kestra Investment Services broker who has been named in customer complaints is former broker James Daughtry, who the firm discharged in 2020 after he was barred by FINRA.
The claimants, who are seeking nearly $2M in damages, are contending that he solicited clients to set up accounts with a third-party investment firm. The US Securities and Exchange Commission (SEC) now says this third-party firm engaged in fraud.
Daughtry and co-conspirators are accused of setting up fraudulent accounts, misappropriating client monies, and moving retirement funds into fake entities. Equity Trust Company, Graysail Advisors, LLC, Small World Capital, LLC, and other individuals appear to have been involved.
Regardless, as his then brokerage firm of record, it was Kestra Investment Services' responsibility to oversee Daughtry’s activities in customers’ accounts while protecting their assets.
SSEK Law Firm is representing a number of the investors who worked with ex-Kestra broker James Daughtry. We are pursuing damages from Kestra Investment Services in FINRA arbitration on their behalf.
Another Kestra Investment Services broker, Stephen Curry, has one customer dispute noted in BrokerCheck. However, the amount sought by the claimant is nearly $7.8M in damages. The investor, who filed their FINRA arbitration claim in 2020, is alleging a breach of fiduciary duty related to their retirement fund.
Curry and Daughtry are not the only Kestra Investment Services brokers whose clients have sustained investment losses. These losses were possibly due to unsuitability, breach of fiduciary duty, misrepresentations and omissions, supervisory failures, or other types of broker misconduct or negligence.
Examples of Recent Regulatory Cases Involving Kestra Investment Services April 2020FINRA fined Kestra $125,000 for sharing personal data with a third-party vendor, which it had retained to help newly hired stockbrokers move customer accounts to the firm. Some 68 brokers shared sensitive, personal customer information with this vendor, which should have never happened.
February 2019FINRA ordered Kestra Investment Services to pay a $225K fine and $1,947,704 in restitution to customers that were overcharged when they purchased Class A shares in certain mutual funds.
The self-regulatory organization (SRO) found that instead of selling Class A shares without the front-end sales fees to eligible customers, the broker-dealer sold them either:
- Class A shares with the front-end fees
- Class B or C shares with back-end sales fees and higher ongoing costs
As a result, eligible customers were overcharged about $1,648,984 for mutual fund purchases. Kestra was accused of failing to properly supervise its registered representatives. Additionally, they failed to provide reasonable written procedures and policies that could have helped them determine when the sales charges should be waived.
November 2016The Texas-based firm was fined $475,000 supervisory failures involving variable annuity L-shares with possibly incompatible, complex, and costly long-term minimum-income and withdrawal riders.
Experienced Broker-Dealer Negligence LawyersAllow our seasoned securities attorneys at SSEK Law Firm to help you explore your legal options. We represent retirees, older investors, retail investors, high-net-worth individual investors, and institutional investors in FINRA arbitration, litigation, and mediation.
Headquartered in Texas and with securities law offices throughout the US, SSEK Law Firm has recovered many millions of dollars on our clients’ behalf. We work with investors nationwide, as well as those abroad who have broker fraud claims against US-based financial firms and their registered representatives.
Contact SSEK Law Firm today for a free, no-obligation case consultation. You can also call (800) 259-9010. In Texas, call our Houston broker fraud attorneys at (713) 227-2400 or our Dallas securities lawyers at (214) 613-5306.
