A father and son who were fired from Waddell & Reed in 2021 have been charged with fraud by the Securities and Exchange Commission.
Kevin John Kane, 66, and Sean Michael Kane, 36, both of York, Pennsylvania, were terminated for cause from the dually registered advisor/broker-dealer on Feb. 23, 2021, the SEC said in a complaint, filed Wednesday in U.S. District Court for the Middle District of Pennsylvania.
The firm wasn't identified by the SEC, either in its complaint or news release about it on Thursday.
But the firm was identified by the Financial Industry Regulatory Authority as Waddell & Reed, where the father was registered since 2013 and the son since 2018, according to their reports on FINRA's BrokerCheck website.
LPL Financial completed a purchase of Waddell & Reed's wealth management business from Macquarie Management Holdings for roughly $300 million in April 2021.
The SEC's complaint also alleged that, following their terminations, to persuade some of their clients to join them at their new firm, the Kanes falsely represented to clients that they left their former firm voluntarily.
The team moved to Cambridge Investment Research and are still affiliated with the firm, according to BrokerCheck.
"Cambridge does not comment on pending litigation matters," Jeff Wulf, senior vice president at the firm, told ThinkAdvisor on Friday. LPL did not immediately respond to a request for comment.
The Kanes also allegedly misrepresented to some clients that they were still associated with their prior firm and could still access client accounts, according to the SEC.
The complaint also alleged that, to further their deceit, the Kanes impersonated certain clients in phone calls to their former firm to execute transactions in their clients' accounts.
The SEC's complaint charged the Kanes with violating the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking permanent injunctions and civil penalties.
During their time at Waddell & Reed, the Kanes provided investment advisory services to more than 100 clients who collectively had over $27 million in assets under management, according to the SEC complaint.
(Image: Diego M. Radzinschi/ALM)
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