Kovack Securities Inc. Review: Regulatory History, Sanctions, and Investor Claims
The White Law Group is investigating potential securities claims involving Kovack Securities.
Kovack Securities, Inc. (CRD #44848), headquartered in Fort Lauderdale, Florida, is a dual-registered broker-dealer and investment advisory firm. According to FINRA BrokerCheck, the firm has reported multiple disclosure events, including regulatory actions and customer arbitrations, raising supervision and compliance concerns relevant to investors evaluating claims against the firm.
Regulatory Actions and FINRA Sanctions Against Kovack Securities
Regulatory actions against broker-dealers may include censures, fines, restitution, and heightened supervisory requirements. Such actions can reflect deficiencies in a firm’s compliance systems and oversight of registered representatives.
November 2025 – Delaware Sanction Related to Prettyman Hiring Practices (Updated)
On November 21, 2025, Delaware’s Investor Protection Unit, part of the Delaware Department of Justice, reached a consent order with Kovack Advisors, Inc. resolving an investigation into the firm’s hiring of broker Robert Prettyman. The settlement, publicly announced December 2, 2025, requires Kovack to pay a $995,180 penalty. According to the consent order:
- Kovack filed multiple inaccurate registration forms that failed to disclose a prior investigation into Prettyman’s conduct
- The Investor Protection Director found failures in supervision, recordkeeping, and document preservation
- Kovack provided inaccurate information in response to regulatory inquiries made during the investigation
- When asked about required pre-employment correspondence, Kovack created dozens of letters, inaccurately labeled each a “2nd Request,” and placed them in personnel files after the fact
Kovack consented to the Director’s findings without admitting or denying the charges. In addition to the penalty, the firm agreed to remove the fabricated pre-employment letters from its personnel files. The full order is available from the Delaware Department of Justice.
August 2022 – FINRA Censure and $210,000 Fine
FINRA censured and fined Kovack Securities $210,000 for supervisory failures related to short-term trading of mutual fund Class A shares, which are generally intended for long-term investors. FINRA found that from March 2015 through May 2017, the firm failed to establish and enforce a supervisory system reasonably designed to ensure compliance with FINRA’s suitability rules. The sanction centered on the conduct of former Kovack representative Mark Charles Koehler, who recommended over $2.1 million in Class A mutual fund purchases across eight customer accounts, five of them belonging to seniors, generating unnecessary sales charges through repeated short-term trades. FINRA barred Koehler from the industry in 2017 after he failed to cooperate with its investigation; he had previously been terminated by Cetera Advisor Networks in January 2015 over similar short-term trading concerns before joining Kovack. Allegations against the firm included:
- Failure to allocate reasonable supervisory resources
- Lack of systems to detect short-term mutual fund trading
- Failure to respond to red flags involving unsuitable trading by a former representative
May 2016 – FINRA Sanctions for Sales Charge Discounts
In May 2016, FINRA sanctioned Kovack Securities for failing to apply required sales charge discounts on eligible purchases of unit investment trusts (UITs). According to FINRA, customers paid $119,319.27 in excessive sales charges. Kovack was censured, fined $125,000, and ordered to pay restitution to affected investors.
Broker Misconduct and Customer Complaints
Broker-dealers have a duty under FINRA rules to adequately supervise their registered representatives. Firms that fail to monitor employee conduct may be held liable for investor losses resulting from negligent supervision.
There have been multiple instances involving former Kovack Securities representatives accused of misconduct, including unsuitable recommendations, unauthorized trading, excessive trading, and misrepresentation.
February 2018 – Jason Mininger Investment Fraud Scheme
In February 2018, former Kovack Securities advisor Jason E. Mininger reportedly pleaded guilty to wire fraud and money laundering. Prosecutors alleged that from January 2014 through May 2017, Mininger misappropriated client funds by depositing investor money into his personal accounts and using it for personal expenses, resulting in at least $870,000 in losses.
FINRA records indicate Mininger was affiliated with Kovack Securities from December 2012 through December 2014 in Rocklin, California. His BrokerCheck report lists eight customer disputes, alleging unauthorized transactions, churning, excessive trading, and misrepresentation.
December 2016 – FINRA Bar of Former Kovack Advisor
In December 2016, FINRA barred a former Kovack Securities advisor following allegations of unsuitable and unauthorized trading. The broker, registered with Kovack from 2011 through 2015 in Lansdowne, Virginia, reportedly accumulated 19 customer complaints, along with multiple regulatory events and an employment separation disclosure.
Kovack Securities Lawsuits and FINRA Arbitration Claims
Brokerage firms may be held responsible in FINRA arbitration when advisors violate securities laws and the firm fails to reasonably supervise their conduct. Claims may include unsuitable investments, breach of fiduciary duty, negligence, and common law fraud.
In 2018, The White Law Group filed a FINRA arbitration claim against Kovack Securities alleging that a financial advisor made unsuitable recommendations involving high-risk penny stocks, including Marathon Patent Group, Inc. and TrovaGene, Inc.
FINRA Rule 3110: Supervision Obligations
FINRA Rule 3110 requires firms to establish and maintain supervisory systems reasonably designed to ensure compliance with securities laws and FINRA rules. This includes:
- Written supervisory procedures
- Ongoing review of customer account activity
- Detection of red flags and potential misconduct
- Periodic branch office inspections
Failures under Rule 3110 often form the basis of regulatory sanctions and investor arbitration claims.
Hiring a FINRA Arbitration Attorney
If you suffered investment losses involving Kovack Securities or a former Kovack broker, you may be eligible to pursue recovery through FINRA arbitration. Arbitration is often faster and less costly than traditional litigation, but it is a technical process best handled by experienced securities counsel.
The FINRA attorneys at The White Law Group assist investors nationwide with:
- Evaluating potential claims
- Drafting FINRA Statements of Claim
- Representing investors in arbitration hearings
- Negotiating settlements
National Securities Attorneys – The White Law Group
The White Law Group, LLC is a national securities fraud and FINRA arbitration law firm representing investors in all 50 states. Since 2010, the firm has handled 800+ FINRA arbitration cases involving broker misconduct, unsuitable investments, churning, unauthorized trading, and securities fraud.
If you have concerns about investments made through Kovack Securities, call 888-637-5510 to speak with a securities attorney.
Learn more at www.whitesecuritieslaw.com.
Frequently Asked Questions About Kovack Advisors
1. Why was Kovack Advisors fined by Delaware regulators?
On November 21, 2025, Kovack Advisors, Inc. agreed to a $995,180 penalty with Delaware’s Investor Protection Unit for violations of the Delaware Securities Act. Regulators found the firm filed inaccurate registration documents, failed to preserve required records, provided misleading information during an investigation, and created backdated, mislabeled supervisory documents tied to its hiring of broker Robert Prettyman.
2. What do recordkeeping and supervision failures mean for investors?
Accurate registration filings, document preservation, and supervisory oversight are critical investor-protection requirements. When an advisory firm fails to properly supervise representatives or maintain complete records, it can make it harder for investors and regulators to identify misconduct, unsuitable investment recommendations, or conflicts of interest in a timely manner.
3. Can investors recover losses involving Kovack Advisors through FINRA arbitration?
Depending on the facts, investors who suffered losses may be able to pursue recovery through FINRA arbitration if the investments were recommended while Kovack-affiliated representatives were acting as registered brokers or associated persons. Claims may involve allegations of failure to supervise, misrepresentations, or unsuitable investment recommendations.
