FINRA Accuses Eugene Kim (Gene Kim) of Broker Misconduct involving Private Placement Investment
The Financial Industry Regulatory Authority (FINRA), the broker-dealer regulator, reportedly filed a complaint against broker Eugene H. Kim (Gene Kim) (CRD No. 2264940), in December 2021 for allegedly violating FINRA rules by “by engaging in a transaction, practice, or course of business that operated as a fraud or deceit upon purchasers.”
Between December 2017 and June 2019, while associated with National Securities Corporation (NSC) (CRD No. 7569), Eugene Kim allegedly engaged in unethical conduct, acted in bad faith, and misused customer funds in connection with a private offering sold by NSC, according to FINRA’s complaint.
In December 2017, Kim allegedly proposed to NSC’s commitment committee that the firm initiate a private placement offering through an NSC-affiliated fund for shares in a private company (“Company A”) at a maximum price-per-share of $9.75. At the time he submitted the offering for approval, Kim had reportedly not confirmed a source of shares for the offering at any price. NSC purportedly approved the offering, and sales representatives allegedly solicited investors and distributed offering documents stating that the sole purpose of the offering was to invest in Company A shares at a maximum price of $9.75 per share.
According to FINRA’s findings, 48 customers reportedly invested a total of $4.055 million in the offering. Prior to closing on escrow, Kim allegedly failed to source Company A shares for the offering at any price, let alone a maximum share price of $9.75. Instead of refunding investors, Kim purportedly initiated the closing of escrow for the offering and received a $16,220 commission. During the following months, FINRA alleges that Kim actively misled the firm’s principals, representatives, and customers, into believing that the fund had purchased Company A shares at the $9.75 price.
Ten months after the offering’s closing, Kim purportedly purchased a limited number of Company A shares at an average price of $20.22 — more than double the $9.75 maximum price per-share identified in the offering documents.
Over $1 million in investor capital remained in cash, as Kim was reportedly unable to find enough shares to purchase with the customers’ investments.
FINRA Rule 2010 “Standards of Commercial Honor and Principles of Trade”
When National Securities Corp. learned of Kim’s alleged misconduct, they notified investors that they had not, in fact, purchased shares of Company A at a maximum share price of $9.75 per share. Instead, investors owned Company A shares at a higher price and some of their funds had not been used to purchase Company A shares at all. As a result of this conduct, Kim violated FINRA Rule 2010. Eugene Kim also allegedly violated FINRA Rules 3110 and 2010 by failing to follow and enforce supervisory procedures.
FINRA Rule 2010, also known as the “Standards of Commercial Honor and Principles of Trade” rule, is a concise yet vitally important FINRA regulation. It mandates all FINRA member firms and their associated individuals to uphold exemplary standards of commercial integrity and equitable trade principles. This rule serves to foster ethical behavior and ensure fair practices within the securities industry. Its scope includes various activities such as soliciting, selling, and executing securities transactions, managing customer accounts, and providing investment recommendations.
FINRA BrokerCheck – Eugene Kim (Gene Kim)
The FINRA BrokerCheck tool is a free online tool that allows investors to research and verify the background and credentials of financial brokers, brokerage firms, and investment advisors registered with FINRA.
BrokerCheck provides investors with detailed information about the professional history, qualifications, and regulatory actions of brokers and brokerage firms. Investors can use the tool to verify whether a broker or brokerage firm is registered with FINRA, as well as to review their employment history, licensing status, and any regulatory actions or complaints filed against them.
Eugene Kim (Gene Kim) was affiliated with the following firms during his career, among others:
09/18/2022 – 09/19/2022, INNOVATION X ADVISORS (CRD#:322292), ROCKVILLE, MD
08/25/2015 – 07/22/2022, NATIONAL ASSET MANAGEMENT, INC. (CRD#:115927), NEW YORK, NY,
B, 06/09/2015 – 07/22/2022, NATIONAL SECURITIES CORPORATION (CRD#:7569), RED BANK, NJ
Recovery of Investment Losses
The White Law Group is investigating potential securities claims involving Eugene Kim and the liability his employers may have for failure to supervise him. 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.
If you are concerned about your investments with Eugene Kim, please call the securities fraud attorneys at The White Law Group at 888-637-5510 for a free consultation.
For more information on The White Law Group, and its representation of investors, please visit WhiteSecuritiesLaw.com.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington. We represent investors in all 50 states including New Jersey. Our attorneys have recovered millions of dollars from many brokerage firms in the past.
Tags: broker investigation, Eugene Kim, FINRA complaint, National Securities Corp Last modified: July 13, 2023