The Seriousness of the Allegations Against Howard Kavinsky
While many investment professionals are dedicated to working in the best interest of their clients, there are unfortunate instances where the opposite occurs. One such case involves registered broker and investment advisor, Howard Kavinsky, who has recently faced serious allegations of misconduct.
According to information released by the Financial Industry Regulatory Authority (FINRA), Kavinsky allegedly overstated account balances and fabricated investments in a hedge fund for at least eight clients, some of whom were senior citizens. Worse still, he denied these actions when interrogated by FINRA and provided false information regarding his clients. As a result of these grave violations, he has been barred from associating with any FINRA member in any capacity.
The damage caused by such incidents can be substantial and long-lasting. Mismanagement of investment accounts can lead been to loss of hard-earned capital and steep financial distress. The matter is even more concerning considering that some of those affected were seniors, a group often relying on their investments for retirement.
The Professional Background of Howard Kavinsky
Howard Kavinsky has been a part of the securities industry since 2011. He previously worked with notable firms such as Hornor, Townsend & Kent, Inc., Morgan Stanley, David A. Noyes & Company, National Securities Corporation, B. Riley Wealth Management, and Supreme Alliance LLC.
Regrettably, in Kavinsky’s case, his seasoned experience failed to translate into a fiduciary duty to his clients. His FINRA BrokerCheck reveals a troubling history of six prior disclosures, including allegations of refusing to provide clients with accurate account statements and withholding pertinent information about account balances. In fact, he was discharged by B. Riley Wealth Management for “failure to follow firm procedures related to concocting consolidated client reports”.
Understanding FINRA Rule and Its Violation
FINRA, the Financial Industry Regulatory Authority, is a non-profit organization that governs business behavior between brokers, brokerage firms, and dealers to protect investors. When an investment professional, like Kavinsky, consistently breaches both legal and ethical obligations, severe penalties can come into play.
Customer-specific suitability, a key element in FINRA’s guidelines, necessitates that a broker or advisor must have a reasonable basis to conclude that a recommended investment is suitable for a particular client. This decision must account for the client’s age, risk tolerance, financial situation, investment objectives and other key factors. Kavinsky’s alleged falsification of client statements clearly illustrates a violation of this principle of suitability.
The Consequences and Lessons Learned
For his severe misconduct, Kavinsky faced the hefty consequence of being barred from associating with any FINRA member firm – a clear indication that such violations are in no way tolerated within the industry.
There are important lessons to be gleaned from Kavinsky’s case – for both investment professionals and investors. For investment professionals, it underscores the need to consistently uphold the fiduciary duty to protect clients’ best interests. As for investors, it reinforces the importance of performing due diligence when selecting an investment professional. Quoting the famous economist, Benjamin Graham, “The investor’s chief problem — and even his worst enemy — is likely to be himself.”
To put it in perspective, a study by the securities litigation law firm, Fitapelli Kurta, found that 7% of financial advisors had a malpractice claim filed against them.
In conclusion, the story of Howard Kavinsky serves as a sobering reminder of the importance of investor vigilance, ethical investment practices, and the critical role FINRA plays in regulating the securities industry. Always remember to carefully select your financial advisor and monitor your investment accounts regularly to ensure your financial and retirement security. Ultimately, by working with a responsible financial advisor, you are taking a huge step in safeguarding your funds and securing your financial future.