FINRA Promissory Note and Variable Annuity Fraud and Mismanagement Attorney, Russell L. Forkey, Esq.
Patrick Shawn Kennedy (CRD #3005062, Registered Supervisor, Raleigh, North Carolina) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for nine months. The fine must be paid either immediately upon Kennedy’s reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier. Without admitting or denying the findings, Kennedy consented to the described sanctions and to the entry of findings that he continued recommending and effecting put options trading in a customer’s account even though he knew that the trading was unsuitable because the customer was unemployed and the risk was inconsistent with the customer’s financial resources, investment objectives and risk tolerance. The findings stated that Kennedy recommended that an elderly couple invest $50,000 in a put options trading strategy with approximately $57,000 to be invested in mutual funds and bonds with none of the mutual funds to be used for put options trading. The findings also stated that the customers’ account, which had approximately $267,298.55, suffered realized and unrealized losses of $195,046.40 due to Kennedy’s put option trading strategy and the liquidation of mutual funds to cover losses from the put options trading and to meet margin requirements of securities that were purchased in the customers’ account due to the put options trading.
The suspension is in effect from May 16, 2011, through February 15, 2012. (FINRA Case #2009018671501).