It was the renowned author Arthur Bloch who noted that, “The easiest way to make money is – stop losing it.” A profound statement which rings especially true in the murky realm of financial management. Unfortunately for the management clients of Kabir Gangahar (CRD #: 4280828), a former KMS Financial Services broker, they might have discovered this rather belatedly. Gangahar was recently slammed with an SEC regulatory action which resulted in suspension and hefty penalties.
A Serious Allegation and Its Wider Ramifications
The SEC’s regulatory action alleged that Gangahar and his investment advisory firm, Gemini Capital Partners, engaged in a deceptive “cherry-picking” scheme where profitable trades were disproportionately allocated to themselves. The manipulation spanned several years, with the adverse effects permeating the financial profiles of countless clients who trusted Gangahar with their investments.
The Adviser’s Background and Broker Dealer
Gangahar carries a portfolio with an avalanche of financial experiences, having passed the Series 65, Series 63, and Series 7 exams, the prerequisites for becoming a securities agent, a General Financial Representative, and a Uniform Investment Adviser respectively. His record also alludes to his affiliation with high-profile firms, among them Wells Fargo Advisors, Raymond James Financial Services, and the alleged partner in crime, Gemini Capital Partners.
FINRA Rules, In Layman’s Terms
Notably, Gangahar’s alleged fraudulent behavior contravenes the Financial Industry Regulatory Authority’s (FINRA) rules. In essence, FINRA is the overseer of finance brokers and brokerage firms. Its rules are designed to protect investors by ensuring investment advisors like Gangahar operate above board.
Violations of rules such as Section 202 of the Investment Advisers Act and Section 206(2) are serious and often carry hefty penalties.
Aftermath and Lessons Learnt
Following Gangahar’s regulatory infractions, the SEC has ordered him and Gemini Capital Partners to cease and desist from violations, and slapped them with monetary punishments including Disgorgement of $130,322 and a Penalty of $22,803.30.
His suspension is set to last for 12 months, disassociating him from a host of financial bodies including brokers, dealers, investment advisers, just to mention a few.
Meanwhile, the once trusting clients are left to pick up the pieces and reassess their investment strategies amidst a climate of trepidation. This case underscores the need for vigilance among investors. It serves as a painful reminder that financial dealings require utmost scrutiny, even when conducted by the so-called professionals.
The Gangahar case highlights a broader issue. According to a study, 1 in 5 investors use advisors who have been disciplined. Unfortunately, these nuances are often hidden in financial jargon and obscured within the complexities of financial markets. But, as an astute investor, it is essential to understand the implications of decisions we make.
This cautionary tale drives home the importance of thorough background checks and mindful reading of FINRA records. Remember, the blind trust of a glossy resume can lead to a future filled with unwarranted financial troubles. Stay vigilant, stay informed, and keep your investments safe.
