The Financial Industry Regulatory Authority suspended an ex-NYLife Securities broker for 18 months after he failed to disclose his participation in an investment club and then repeatedly lied to the firm on its questionnaires concerning private securities sales he made related to that club, according to FINRA.
Broker David Quentin Kendrick signed a letter of acceptance, waiver and consent Wednesday in which he agreed to the suspension and to pay a $30,000 fine over his actions. He agreed to the letter without admitting or denying the findings. FINRA accepted the letter Thursday.
Between May 2002 and May 2018, Kendrick was associated with NYLife Securities as a general securities representative. Before that, he was registered with FINRA through two other firms: Lincoln Financial Advisors Corp. and the Lincoln National Life Insurance Co., in 2001-2002, according to FINRA’s BrokerCheck website.
Between November 2011 and January 2017, Kendrick “engaged in an outside business activity, as an officer, member and manager of an investment club, without providing prior written notice to NYLife, in violation of FINRA Rules 3270 and 2010,” according to FINRA. Between June 2010 and May 2018, Kendrick also participated in nine private securities transactions, without providing prior written notice of, or receiving written approval for, these transactions from NYLife, in violation of NASD Rule 3040 (for conduct occurring before Sept. 21, 2015) and FINRA Rules 3280 (for conduct occurring on or after Sept, 21, 2015) and 2010, FINRA said.
In a Uniform Termination Notice dated May 24, 2018, NYLife reported Kendrick’s resignation “after failing to disclose his participation in an investment club and other unapproved outside business activities, including investments in private placements,” according to the letter of acceptance, waiver and consent.
Kendrick was “permitted to resign after failing to disclose his participation in an investment club and other unapproved outside business activities including investments in private placements,” according to BrokerCheck. It added: “The company’s review found Mr. Kendrick invested his own money and provided information about investment opportunities to certain New York Life clients and other investors who invested in private placements.” That was the only disclosure listed for his 16-year career thus far.
In November 2011, Kendrick and eight other individuals (including two of NYLife’s customers) started an investment club, “TC,” according to FINRA. Kendrick was designated as a manager and agent and vested with the exclusive authority to manage and control the affairs of TC, while also receiving an irrevocable power of attorney, FINRA noted. Following his appointment, Kendrick managed TC’s financial and administrative affairs that included electing, introducing, and facilitating TC’s investments, according to FINRA.
But Kendrick did not disclose his participation in TC to NYLife until August 2015, when he first requested the firm’s approval of TC as an outside business activity, FINRA said. Kendrick also did not tell NYLife that he commenced his TC-related activities in November 2011 or that he had personally invested and facilitated the investment of others through TC, according to FINRA. Although the firm did not approve TC as an outside business activity, Kendrick continued his TC-related activities and continued to engage in outside business activities through TC until about January 2017, when he was again instructed by the firm to remove himself from TC’s registration” with the Louisiana secretary of state, FINRA said.