FINRA Bars Ex-Kestra Rep Who Refused to Testify in His Fraud Case
The ex-broker was suspected of making fraudulent and unauthorized transactions in customers’ accounts, the regulator says.
The Financial Industry Regulatory Authority barred an ex-Kestra Investment Services representative from association with any FINRA member in any capacity after he refused to provide testimony as part of the regulator’s investigation into “potentially fraudulent and unauthorized transactions in several” of his customers’ accounts, according to FINRA.
Without admitting or denying the findings, James Blake Daughtry signed a letter of acceptance, waiver and consent March 5 in which he agreed to FINRA’s sanction. FINRA accepted the letter Wednesday.
It was not immediately clear if Daughtry was still working for Kestra in some capacity. However, he is not currently registered as a broker, according to his profile on FINRA’s BrokerCheck website. He is listed as both a previously registered broker and previously registered investment advisor.
There were no disclosures related to his alleged fraud and FINRA dispute on his Broker Registration History at the BrokerCheck website as of Thursday afternoon. In fact, there were no disclosures cited for his 20-plus years as a FINRA-registered rep.
Kestra Investment Services parent Kestra Financial and Chris Lazarini, an attorney at the Memphis, Tennessee office of law firm Bass, Berry & Sims who represented Daughtry in the dispute, did not immediately respond to requests for comment Thursday.
Daughtry became registered with FINRA in 1999 and has been registered as a general securities representative through his association with Kestra since February 2015, according to the FINRA AWC letter.
On Feb. 21, in connection with an investigation into Daughtry’s suspected fraud and unauthorized transactions in clients’ accounts, FINRA staff sent a request to him for on-the-record testimony pursuant to FINRA Rule 8210 (governing the provision of information and testimony and inspection and copying of books), according to FINRA.
As stated during a telephone call between FINRA staff and Daughtry’s counsel on March 3, the rep acknowledged that he received FINRA’s request and will not appear for on-the-record testimony at any time. By refusing to appear for on-the-record testimony, Daughtry violated FINRA Rules 8210 and 2010 (governing standards of commercial honor and principles of trade), according to FINRA.
— Check out FINRA Suspends Ex-Merrill Rep for Cheating on Exams Twice on ThinkAdvisor.