On Aug. 12, 2022, the Financial Industry Regulatory Authority (FINRA) announced that former Baton Rouge-based Park Avenue Securities registered representative Bradley S. Kavanagh had been permanently barred from association with any FINRA member in all capacities. FINRA’s decision was made in connection with its investigation into the Uniform Termination Notice for Securities Industry Registration (Form U5) filed by Park Avenue Securities that detailed Kavanagh’s dismissal for “unapproved use of text messaging and soliciting equity transactions without a Series 7.” A Form U5 must be filed when a person leaves a brokerage firm for any reason. Read the full BrokerCheck report here.
Without admitting to or denying the findings, Kavanagh consented to the sanction and to the entry of findings that he refused to provide information and documents requested by FINRA. The violation is detailed in FINRA’s Monthly Disciplinary Actions report for October 2022.
Are brokers allowed to text message their clients?
According to a Smarsh blog post, FINRA has cracked down on financial advisors’ use of personal devices, email addresses, and apps in customer communications. The regulatory authority’s Rule 4511 requires that members preserve accurate books and records, as well as business-related client communications, for at least six years; many of the recent violations cited involve unlogged text messages that led to incomplete recordkeeping. Moreover, regulators are seeing the exchange of confidential information across such devices or channels, including details like account performance, dates of birth, and social security numbers. This is a clear breach of FINRA’s Rule 2010, which requires members to “observe high standards of commercial honor.”
In Kavanagh’s case, Park Avenue Securities maintained a texting policy. Though it is unclear what information was being sent, FINRA’s expectation of registered representatives is to “know, understand, and comply with your firm’s compliance procedures.”
What is a Series 7 license?
Professionals with a Series 7 license are allowed to sell securities in the United States. Administered by FINRA, the rigorous Series 7 exam is required by most financial services employers. As detailed in this SmartAsset article, financial services practitioners must pass the exam to sell any type of security other than commodities and futures. Those with a Series 7 license have demonstrated expertise in retirement plans, bonds, annuities, taxes, and more, as well as expertise in building diversified, risk-assessed investment portfolios. To protect and best serve their clients, financial professionals with a Series 7 certification are held to stricter standards by FINRA.
FINRA makes it abundantly clear that financial services professionals have an obligation to serve their customers with honesty and integrity. Without a Series 7 license, financial advisors should not solicit equity transactions.
We can help.
If you or someone you know has lost money because of broker or financial advisor misconduct, Lance McCardle and his team of experienced investment fraud lawyers can help. Our firm has helped hundreds of clients recover their losses due to broker fraud or negligence. Contact us today.