Kalos Capital Broker Suspended For Unsuitable Recommendations

November 6, 2019 Author: Brian Levin
Kalos Capital Broker Darren Michael Kubiak

FINRA Takes Regulatory Action Against Broker Darren Kubiak

As part of an ongoing  investigation of brokers who made unsuitable recommendations of GPB Capital Holdings, Levin Law has filed a case involving Kalos Capital Broker Darren Michael Kubiak (CRD#:  1239086).  The pending suit alleges $500,000 in damages based on his recommendation and sale of GPB Capital and other private placements..

In addition to three (3) pending customer disputes, Kubiak has now been suspended by the Financial Industry Regulatory Authority (FINRA) for making unsuitable recommendations and failed to perform reasonable due diligence on investments prior to recommending and selling them to customers.  According to his  Letter of Acceptance, Waiver, and Consent (AWC), Kubiak has worked in the securities industry since 1983.  Kalos Capital, Inc. has employed him since 2007.

Sanctions Against Kubiak and Kalos Capital

Following the regulatory action taken by FINRA, Kubiak agreed to a three (3) month suspension from associating with any FINRA member firm in all capacities and a $5,000 fine.  His employer, Kalos Capital, agreed to a censure, $30,000 fine, and to pay restitution in the amount of $86,614 plus interest.

According to the AWC, “Kubiak recommended the purchase of Leveraged and Inverse Exchange Traded Funds (LIETFs) to 17 customers without having a sufficient understanding of the risks and features associated with the LIETFs and thereby failing to have a reasonable basis to make these recommendations.”  In their findings, the regulatory agency notes that LIETFs, which are considered non-traditional ETFs, reset daily and are, therefore, “unsuitable for retail investors who plan to hold them for longer than one trading session.” In Mr. Kubiak’s case, the LIETFs were held by customers for an average of 722 days.  This extraordinarily long holding period resulted in losses of approximately $98,000 to those investors.

FINRA sanctioned Kalos Capital for failing to establish, maintain, and enforce a supervisory system.  Their failure to reasonably supervise Kubiak ultimately caused investors to incur significant losses.

FINRA Rule 2111 (Suitability)

Under  FINRA Rule 2111, all brokers must make suitable recommendations to their investors.  FINRA members are required “to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors.”  Additionally, under Rule 2111, brokers must have a firm understanding of the risks and rewards associated with their investment offered and recommended to customers.

If you believe that you have suffered investment losses through unsuitable private placements, ETFS, or other investment products, contact Levin Law today for a free consultation.  Founding attorney Brian levin has recovered tens of millions on behalf of investors throughout the world. Call  Levin Law today at (305) 402-9050 or contact us through an online form for a free case evaluation.

 

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