Kestra Investment Services LLC reviewed by top securities fraud attorneys, the White Law Group
The White Law Group reviews the regulatory history of Kestra Investment Services, LLC. If you suffered investment losses through Kestra Investment Services, you are not alone. Kestra Investment Services LLC (CRD# 42046, Austin, Texas) is a national financial advisory firm supporting over 1,700 financial professionals with $103 billion in assets under management. According to its FINRA BrokerCheck report, the firm has 16 disclosure events on its record, including 14 regulatory actions and 2 arbitrations.
Recovery for Investors
Investors have raised serious concerns about broker misconduct, unsuitable investment recommendations, and supervisory failures — including a recent FINRA arbitration claim involving a volatile exchange-traded note that resulted in millions of dollars in customer losses. If you have concerns about investments made through Kestra, a securities attorney may be able to help you recover your losses through FINRA arbitration.
FINRA, the self-regulator that oversees brokers and brokerage firms, and the SEC may impose regulatory actions against a broker-dealer such as censures, fines, suspensions, and restitution, among others. Regulatory actions can have serious consequences for a broker-dealer’s profile and reputation.
The following is a review of publicly available information regarding Kestra Investment Services and its securities sales practices and FINRA regulatory history. To view Kestra Investment Services’ full CRD, you can visit FINRA BrokerCheck.
Kestra and iCapital
Kestra Financial is reportedly expanding its strategic partnership with iCapital to improve its alternative investment offerings. This collaboration allows Kestra Financial advisors and their clients to access alternative investments through iCapital’s technology platform. Kestra and iCapital have reportedly partnered for the past five years to provide customers access to alternative investment products.
iCapital, a fintech platform, offers access to alternative investments including private equity, private credit, hedge funds, structured investments, and other alternatives.
VXX ETN Arbitration Claim (2026)
In a significant development first reported in June 2026, customers of Kestra Financial have reportedly filed a FINRA arbitration complaint against the broker-dealer, alleging that a registered representative made unsuitable investment recommendations involving a highly volatile exchange-traded note.
The complaint, filed in February 2026, involves customer investments in the iPath Series B S&P 500 VIX Short-Term Futures ETNs (ticker: VXX), an exchange-traded note issued by Barclays that provides exposure to market volatility. Barclays itself describes the product as highly risky, riskier than ordinary unsecured debt securities, with no principal protection — meaning investors may lose some or all of their investment.
According to details that became public through a related federal lawsuit filed by Barclays Capital Inc. in the U.S. District Court for the Northern District of Texas, the FINRA claimants allege that Kestra’s registered representative, Markus Byrd, used his discretionary authority to purchase and hold VXX ETNs in customer accounts beginning in or around September 2020 — and continued to hold them for years — even though VXX is described as a product virtually guaranteed to lose money when held long-term. Customers further allege that Byrd made false and misleading representations about the product’s performance and characteristics that were inconsistent with the Barclays prospectus.
VXX – Complex Investment Product
The VXX product is specifically designed for short-term traders and short sellers, not buy-and-hold investors. Because it is tied to futures contracts, the product is subject to “contango,” a market condition that causes prices to decay over time as cheaper contracts are sold and more expensive ones are purchased. Barclays halted new issuance of VXX in March 2022.
Byrd is no longer with Kestra. According to FINRA BrokerCheck, he has been associated with Candor Wealth Management in Dallas since 2024 and has been the subject of six customer disputes since 2023 — four of which have been settled. Settlement amounts include $3.3 million, $705,000, and $210,000, with two additional disputes still pending. The timeline of all six disputes suggests they are related to his time at Kestra rather than his current firm.
The customers in the FINRA complaint assert claims against Kestra for unsuitability, failure to supervise, breach of fiduciary duty, fraud, negligence, breach of contract, and violations of the Texas Securities Act, among other causes of action.
Kestra has attempted to name Barclays Capital Inc. as a third party in the FINRA dispute, which prompted Barclays Capital to seek federal court intervention to remove itself from the claim.
Broker Misconduct and Customer Complaints
There have been several cases of registered representatives employed by Kestra Investment Services who were allegedly involved in broker misconduct and fraudulent activities. Broker-dealers are required to supervise their employees. If they fail to do so, they may be held liable through a FINRA arbitration claim.
July 2020: Six seniors reportedly filed a lawsuit in Houston County, Alabama, alleging that their Kestra financial advisor, James Blake Daughtry, stole more than $1 million from their retirement accounts by purportedly copying and pasting their signatures on documents. The lawsuit claims Daughtry and two alleged co-conspirators stole the retirees’ entire life savings by transferring their retirement accounts to “sham entities” allegedly controlled by the defendants. The lawsuit further alleges that Kestra Investment Services was negligent for not preventing the fraud. Daughtry was reportedly barred by FINRA for allegations of “potentially fraudulent and unauthorized transactions in customers’ accounts.”
Kestra Broker Has 32 Customer Complaints
July 2019: Washington securities regulators reportedly sanctioned former Kestra Investment Services advisor Tom Puentes for failure to report two customer complaints while on alleged heightened supervision. Puentes agreed to pay a fine of $12,500 and be subject to a heightened supervision plan for at least one year. There are 32 customer complaints and 3 employment separations indicated on his broker profile, including allegations of “unsuitability with respect to Puerto Rico Municipal Bond” and unauthorized trades.
February 2019: FINRA barred Kestra advisor John Spach from associating with any FINRA member after Kestra dismissed him for “potential violation of various firm policies while attempting to settle a customer complaint.”
Kestra Investment Services – Regulatory History
April 2020: FINRA censured and fined Kestra Investment Services $125,000 after finding that from approximately November 2017 through February 2019, Kestra caused certain recruited registered representatives to take nonpublic personal customer information from their prior firms and disclose it to a third-party vendor without the other broker-dealers’ or customers’ knowledge or consent — causing those broker-dealers to violate the SEC’s Regulation S-P.
Kestra Investment Services: More Supervisory Failures
April 2019: Kestra reportedly failed to reasonably supervise one agent in connection with the sales of structured products to clients in Pennsylvania. The Pennsylvania Department of Banking and Securities fined the firm $30,000 for failure to supervise.
February 2019: FINRA censured and fined Kestra Financial $225,000 and required the firm to pay $1.9 million in restitution for allegedly overcharging more than 3,200 mutual fund investors over a nine-year period. FINRA also stated that “Kestra failed to reasonably supervise its registered representatives’ recommendation and sale to its customers of $52 million in L-share class variable annuities.”
November 2016: FINRA sanctioned Kestra for the sales and supervision of variable annuity products. Between October 2013 and June 2014, Kestra failed to reasonably supervise its registered representatives’ recommendations of multi-share class variable annuities, failed to provide adequate training, and failed to establish, maintain, and enforce an adequate supervisory system. The firm was censured and fined $475,000.
FINRA’s Supervision Rule
FINRA’s supervision rule (FINRA Rule 3110) focuses on the regulatory oversight and monitoring of member firms and registered representatives in the securities industry, with the primary objective of protecting investors.
When brokers violate securities laws — such as making unsuitable investments or exercising improper discretionary authority — the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration. If your broker has defrauded you or made unsuitable recommendations, you may be able to file a FINRA claim against your brokerage firm.
FAQs
Q: What is the VXX ETN and why is it considered unsuitable for long-term investors? The iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX) is an exchange-traded note issued by Barclays that tracks short-term VIX futures contracts as a bet on market volatility. It is generally considered appropriate only for short-term traders because of a phenomenon called “contango” — as the ETN rolls from cheaper, expiring futures contracts into more expensive ones, the value of the position erodes over time. Barclays’ own prospectus states that investors may lose some or all of their principal, and the firm halted new issuance of the product in March 2022. Holding VXX long-term in a buy-and-hold portfolio is widely regarded by regulators and industry professionals as unsuitable for most investors.
Q: Can I file a FINRA arbitration claim against Kestra Investment Services for investment losses? Yes. If a Kestra registered representative made unsuitable investment recommendations in your account, exercised improper discretionary authority, or made misrepresentations about an investment product, you may have grounds to file a FINRA arbitration claim against the firm. Broker-dealers like Kestra have a duty to supervise their registered representatives, and when they fail to do so, they can be held liable for investor losses. An experienced securities attorney can evaluate your claim and advise you on your options.
Q: What should I do if I believe a Kestra broker mismanaged my account? If you believe a Kestra financial advisor made unsuitable recommendations, misrepresented an investment, or exercised discretionary authority improperly in your account, you should consult a securities fraud attorney as soon as possible. There are statutes of limitations on FINRA arbitration claims, and acting promptly protects your rights. The White Law Group offers free consultations for investors who believe they have suffered losses due to broker misconduct and has handled over 800 FINRA arbitration cases nationwide.
Free Consultation with National Securities Attorneys
If you have concerns regarding investments you purchased through Kestra Investment Services and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 800 FINRA arbitration cases.
