Co-founded by Brian Kovack, Esq. in 1997, Kovack Securities Inc. (“KSI”) is a privately- and family-owned independent broker-dealer owned by Kovack Financial, LLC. As of Aug. 2022, the firm, which is headquartered in Ft. Lauderdale, Florida, had approximately 380 retail registered representatives and financial advisors. Its brokers are licensed in all 50 states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
Financial Misconduct at Kovack Securities Inc.
KSI is licensed by the Financial Industry Regulatory Authority (FINRA), and as such is legally obligated to ensure its brokers are acting lawfully in the interest of their investors. If a client suffers losses as a result of negligent behavior or misconduct from a broker, then the firm may be held legally responsible to repay the damages.
KSI and brokers backed by KSI have a long history of misconduct and complaints dating back to 2000.
In August 2022, the firm was fined $210,000 for failing to adequately supervise short-term mutual fund trades. From March 2015 to May 2017, an unnamed representative engaged in a pattern of short-term trading of A share of mutual funds in 11 accounts of eight customers, including five senior citizens. Despite the rep’s employment history showing that he had been fired from his last broker-dealer while under review for short-term mutual fund trading, KSI failed to implement heightened supervision. The rep ultimately recommended $2.1M+ in A share mutual fund purchases to the eight customers despite previously recommending sales to the same customers the year prior. This resulted in customers incurring unnecessary sales charges.
Other reasons for the many fines levied against KSI over the years include:
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