Calton & Associates – Broker Misconduct & Regulatory Actions

The White Law Group is investigating potential securities claims involving Calton & Associates (CRD#: 20999, Tampa, FL) Updated May 19, 2021

Calton & Associates, LLC, headquartered in Tampa, FL, is a national financial advisory firm. The firm reportedly has 16 disclosure events on its broker record including 11 regulatory events and 6 arbitrations.

Both the SEC and FINRA have sanctioned the firm for regulatory issues in the past few years.

May 19, 2019 –  FINRA Censures and Fines Calton for Supervisory issues related to Exchange Traded Products.

Most recently this week, the Financial Industry Regulatory Authority (FINRA) censured and fined Calton & Associates $250,000 for alleged supervisory failures related to the sale of non-traditional and volatility-linked exchange traded products (ETPs). The firm was also reportedly ordered to pay $472,007.20 plus interest in restitution to customers.

Non-traditional and volatility-linked ETPs are complex products intended to be held for short periods of time as part of a trading strategy rather than as buy-and-hold investments. Between February 2014 to February 2020, Calton allegedly permitted its representatives to offer the products to retail customers without a supervisory system to properly understand the products’ features and risks and review and monitor transactions.

Apparently, the firm’s representatives purportedly recommended non-traditional and volatility-linked ETPs to retail customers without understanding the products were intended for short-term trading, and the firm’s customers held the products for longer periods of time, resulting in financial losses.

SEC Charges Calton & Associates with Breaching Fiduciary Duty

March 2019 – According to a cease and desist order, the Securities and Exchange commission reportedly charged Calton & Associates, Inc. with  breaches of fiduciary duty and inadequate disclosures in connection with its mutual fund share class selection practices and the fees it and its associated persons received. At times between January 1, 2014 and June 7, 2018 the firm allegedly purchased, recommended, or held for advisory clients mutual fund share classes that charged 12b-1 fees instead of lower-cost share classes of the same funds for which the clients were eligible. Calton and its associated persons reportedly received 12b-1 fees in connection with these investments and failed to disclose it. Further the firm and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes.

Calton and Associates was reportedly censured and required to pay disgorgement and prejudgment interest to affected investors, totaling $305,044.

November 2016 – According to the Financial Industry Regulatory Authority (FINRA), the firm reportedly submitted an AWC in which the firm was fined $5,000. Without admitting or denying the findings, the firm purportedly consented to the sanction and to the entry of findings that it failed to report transactions in Trade Reporting and Compliance Engine® (TRACE®)-eligible securitized products to TRACE within the time required by FINRA Rule 6730(a). (FINRA Case #2015046491801)

Broker Misconduct and Customer Complaints

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.

There have been several cases of registered representatives employed by Calton & Associates who were allegedly involved in broker misconduct and fraudulent activities.

September 2019 – Former Calton & Associates advisor Chris Kubiak was reportedly sentenced to 30 months in prison after he was allegedly convicted of fraud relating to stealing $370,000 from four clients, three of whom were senior citizens, between June 2015 and August 2018.

Kubiak allegedly used the money for gambling and for personal expenses.

Chris Kubiak was apparently affiliated with Calton & Associates in Brookfield, WI from July 2017 until he was reportedly fired in October 2018 after his arrest, according to his FINRA BrokerCheck report. The Financial Industry Regulatory Authority (FINRA) barred Kubiak in October 2018 from working in the securities industry.

October 2015 – Former Calton advisor Randy Burke was reportedly barred from the industry after allegedly participating in private securities transactions without providing written notice to his member firm. He allegedly made misrepresentations in his sales to an elderly customer by telling her she would be entitled to a share of the profits in the future sale of a lodge property in Alaska.

According to FINRA, Burke purportedly deposited $38,000 of the customer’s money into a joint business checking account he shared with his wife and used the money for personal gain. He also allegedly used another customer’s money in the sale of false investments in an entity called “Lodge Alaska, LLC”.

Burke was reportedly registered with Calton & Associates in Hickory from September 2013 until October 2015, according to his broker profile. He reportedly has three customer disputes filed against him.

Free Consultation with a Securities Attorney

The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois.

If you have concerns regarding investments you purchased through Calton & Associates and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.