As a financial analyst and legal expert with over a decade of experience, I’ve seen my fair share of cases involving improper conduct by financial advisors. The recent suspension and fine of Kurt Berry, a former Vanderbilt Securities broker, is a prime example of the serious consequences that can result from failing to follow FINRA rules and regulations.
According to FINRA’s findings, Kurt Berry participated in private securities transactions involving four customers between January 2019 and September 2021, without providing prior written notice to his member firms or receiving their approval. These transactions, which began while he was registered with Regulus Financial Group and continued during his time at Vanderbilt Securities, involved customers investing a total of $517,410 in oil and gas wells. Berry received $8,000 in compensation related to these investments.
The seriousness of this case is underscored by the fact that in September 2021, the SEC took action against the individuals and entities that issued the oil and gas securities in question. The SEC found that they had made material misrepresentations and omissions in connection with the offerings and failed to file registration statements.
Financial Advisor’s Background and Past Complaints
Kurt Berry has 21 years of experience in the securities industry and is currently registered as an investment advisor with First National Advisors in Johnson City, Tennessee. His past registrations include Vanderbilt Securities, Regal Investment Advisors, Regulus Advisors, MML Investors Services, and Prudential Financial Planning Services.
Berry’s BrokerCheck report reveals one pending investor complaint filed in 2023, alleging that he represented oil and gas investments as safe and consistent with the clients’ objectives while failing to adequately discuss the risks associated with these products. The complaint alleges damages of $473,000.
FINRA Rule Violations and Consequences
FINRA Rule 3280 prohibits brokers from participating in private securities transactions without providing prior written notice to their member firm and, in cases where they receive selling compensation, without obtaining the firm’s prior written approval. By failing to provide written notice to Regulus Financial Group and Vanderbilt Securities and not receiving written approval from either firm, Kurt Berry violated this rule.
As a result of these violations, FINRA issued Kurt Berry a six-month suspension and a fine of $5,000. He was also ordered to pay disgorgement of $8,000 plus interest.
Lessons Learned for Investors
This case serves as a reminder of the importance of working with financial advisors who adhere to FINRA rules and prioritize transparency and proper disclosure. As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.”
Investors should always research their financial advisors’ backgrounds and any past complaints or disciplinary actions. A startling financial fact: according to a 2019 study by the Stanford Law School, one in 13 financial advisors has a misconduct record.
By staying informed and vigilant, investors can protect themselves from falling victim to improper conduct by financial advisors and make more informed decisions about their investments.
