FINRA has suspended Crown Capital Securities, L.P. broker Kevin Barton from the securities industry for four months for engaging in an outside business activity, exercising discretion in customers’ accounts without prior written authorization, and mismarking trades as unsolicited. Barton was also fined $17,500.
If you have lost money with Kevin Barton, or Crown Capital Securities, L.P., contact FINRA arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
Iorio Altamirano LLP represents investors in disputes with their financial advisors and brokerage firms, such as Crown Capital Securities, L.P.
FINRA Letter of Acceptance, Waiver, and Consent (“AWC”)
Kevin Barton and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on April 27, 2021, over the following findings:
- From January 2017 through November 2018, Barton engaged in an outside business activity without providing prior written notice to his firm in violation of FINRA Rules 3270 and 2010.
- Between June 2016 and May 2019, Barton exercised discretion in four customers’ accounts without written authorization in violation of NASD Rule 2510(b) and FINRA Rules 3260(b) and 2010.
- Between June 2016 and May 2019, in the same four customers’ accounts, Barton mismarked approximately 80 trades as “unsolicited” in violation of FINRA Rules 4511 and 2010.
Outside Business Activity
In December 2016, Barton signed an employment agreement with a California corporation and was its sole employee. His duties included the marketing of financial products and services.
FINRA Rule 3270 provides that no registered person may be an employee of another person or be compensated by any other person as a result of any business activity outside the scope of the relationship with his member firm unless he has provided prior written notice to the member. Further, under FINRA Rule 2010, FINRA members and associated persons are required to observe high standards of commercial honor and just and equitable principles of trade.
For tax years 2017 through 2019, Barton was paid by the corporation. Barton failed to timely disclose this outside business activity to his firm. In fact, he omitted it from a disclosure form he completed in December 2017 and only disclosed it to the firm in November 2018, approximately 22 months after his employment began.
The firm approved the activity. However, Barton violated FINRA Rules 3270 and 2010.
Discretionary Trading Without Prior Written Authorization
FINRA Rule 3260, and its predecessor NASD Rule 2510(b), prohibits registered representatives from exercising discretionary power in a customer’s account without the customer’s prior written authorization and acceptance by the firm. This is known as unauthorized trading.
From June 2016 to May 2019, on approximately 15 days, Barton exercised discretion without prior written authorization in four fee-based accounts maintained by four customers, including two seniors. The customers conveyed oral authorization to Barton to exercise discretion in their accounts. None complained about the trading. However, the customers did not provide written authorization for Barton to exercise discretion, nor did they always speak with Barton on the days that he effected trades in their accounts.
Barton’s firm’s policies prohibited discretionary trading without prior written approval from the client and firm. Barton never requested or obtained approval from the firm to exercise discretion in the customers’ accounts. As such, Barton violated NASD Rule 2510(b) (for conduct prior to May 8, 2019) and FINRA Rules 3260 (for conduct after May 8, 2019) and 2010.
Inaccurate Books and Records
FINRA Rule 4511 requires members to “make and preserve books and records as required under the FINRA rules, the Exchange Act and the applicable Exchange Act rules.” Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 thereunder require firms to make and keep a record of “each brokerage order” showing “the terms and conditions of the order,” including whether the order was solicited.
A registered representative who mismarks an order as “unsolicited” causes a firm to create an inaccurate record, in violation of FINRA Rules 4511 and 2010.
From June 2016 to May 2019, in the same four customer accounts, Barton marked approximately 80 order tickets as “unsolicited” when the trades were “solicited” as a result of his exercising discretion in these accounts. Though none of the customers complained about the trades, Barton violated FINRA Rules 4511 and 2010.
Kevin Barton (CRD#: 2542056)
Barton entered the securities industry in 1994. He has 26 years of experience in the securities industry and has been registered as a broker with Crown Capital Securities, L.P. in Vista, CA, since December 2000.
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Kevin Barton, or Crown Capital Securities, L.P., contact FINRA arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at august@ia-law.com, jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.