The Financial Industry Regulatory suspended a former LPL Financial broker from association with any FINRA member in all capacities for 45 days after he participated in unauthorized investments related to a minor league professional soccer team and then attempted to hide it from the firm, according to the regulator.
Without admitting or denying the findings, John George Kallis signed a letter of acceptance, waiver and consent Tuesday in which he agreed to be suspended and pay a $5,000 fine. FINRA accepted the letter Wednesday.
LPL and Kallis did not immediately respond to requests for comment Thursday.
Kallis registered with LPL in January 2010 and remained associated with the firm until it terminated his registration by a Form U5 filed on Nov. 20, 2018, according to FINRA. The Form U5 stated he was terminated for “failure to timely disclose participation along with client and non-client participation in a personal, private investment involving bringing” a pro soccer team to Louisville, Kentucky, according to FINRA, quoting LPL.
In September 2014, Kallis solicited two investors, one of whom was a customer of LPL and “both of whom were long-time friends, to each purchase $25,000 interests in a LLC formed to invest in” the soccer team, according to FINRA. During the period in question, Kallis participated in additional investments by both investors in the LLC, according to FINRA. Both clients invested an aggregate total of $95,000, the regulator said.
“Kallis participated by, among other things, providing the investors with the subscription agreement and other written materials and by communicating with them verbally and by email to discuss the investments,” according to FINRA. The rep “did not receive any compensation for soliciting the investments, nor did he represent or otherwise suggest that the investments had been approved by” LPL, the regulator said. “However, Kallis failed to provide the Firm with prior notice or obtain the Firm’s advance approval before participating, as required,” according to FINRA.
Kallis also “incorrectly answered ‘no’” on LPL compliance questionnaires during the period in question that asked him whether he had participated in any private securities transactions away from the firm, according to FINRA.