In March, 2013 FINRA regulated broker dealer Kalos Capital, Inc. was fined $45,000 as a result of failing to maintain and enforce an effective supervisory system that ensured emails sent between its clients and Kalos Capital’s brokers were reviewed and retained. FINRA alleged that the firm’s brokers who conducted business with customers outside of the firm used personal email addresses, rather than approved Kalos Capital email addresses. The risk of doing so is that such communications could contain recommendations to purchase products that are not approved by the broker dealer. Without proper systems in place to ensure that all emails were reviewed and retained, FINRA alleged that Kalos Capital maintained a deficient supervisory system, and fined the firm $45,000.
Kalos Capital is a broker dealer that sells alternative investments such as non-traded REITs, oil and gas programs, private placements and securities of business development companies. Many alternative investments are illiquid and charge high fees. All investors considering investing in alterative investments should carefully read the private placement memorandum for risks, conflicts of interest and fees. What may be sold as an alternative to stock market volatility could, in fact, be a high risk, highly leveraged investment.
Kalos Capital’s registration and disciplinary history
Kalos Capital is registered with the SEC, FINRA, and in 51 states and territories
According to FINRA’s CRD disclosure report, Kalos Capital has been the subject of one regulatory investigation.
The Law Office of David Liebrader practices exclusively in the field of investment loss recovery and our securities attorneys have successfully resolved over 1000 investment loss cases over the past 20 years. Recoveries for clients top $40 million. The types of claims we have successfully handled include those involving unsuitable investments (suitability claims), excessive trading or “churning”, misrepresentations and omissions, unauthorized trading, over-concentration of illiquid or overly risky investments, pump and dump scams involving “penny stocks”, direct participation programs (private placements) involving real estate investment trusts (REITS), oil and gas exploration programs, leasing equipment deals and receivable financing, promissory notes whether sold through a broker dealer or as part of the outside business activities of a registered representative, ponzi scheme losses, failure on the part of the broker dealer to perform due diligence, state securities law (blue sky) violations and failure to supervise.
Investment losses can be recovered through a process known as FINRA arbitration. FINRA regulates broker dealers that sell investments, and provides an arbitration forum to resolve investor disputes. Investors can pursue claims against their brokerage firms in the FINRA arbitration forum. Common claims in the forum are those for suitability, breach of fiduciary duty, misrepresentations and omissions, negligence, violation of FINRA rules, state and federal securities laws violations, elder abuse, breach of contract and failure to supervise. On average, the recovery process takes approximately a year, from start to finish.
FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).
If you have suffered investment losses please call The Law Office of David Liebrader at (702) 380-3131 for a free, confidential consultation