Broker settles SEC fraud and Reg BI charges for $2 million

The Securities and Exchange Commission recently took action against former broker Christopher Booth Kennedy for violating securities laws, resulting in significant losses for his clients. Kennedy agreed to settle the charges by paying over $2.1 million.

During his time as a registered representative at Western International Securities Inc. between February and July 2021, Kennedy made false and misleading statements to customers about the value and success of his trading strategy. This included sending falsified account statements to one customer, inflating the account value. Western International, based in Pasadena, California and managing around $2.7 billion, was where Kennedy worked at the time.

Kennedy also faced allegations of violating Regulation Best Interest by recommending a risky investment strategy without a sound basis, leading to substantial customer losses. This resulted in over $363 million in transactions across 19 accounts, with customers losing more than $9 million in total.

In response to the charges, Kennedy agreed to a settlement that includes paying over $958,000 in disgorgement and prejudgment interest, along with a civil penalty of $958,000. The SEC’s complaint against him includes violations of the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and Reg BI.

FINRA, which barred Kennedy last year, provided assistance in the case. The SEC’s actions highlight the importance of protecting investors and upholding regulatory standards in the financial industry.