Starship Enterprise, Lone Ranger, Tonto, Silver, Pumpkin Spice Latte, And FINRA Settlement
September 18, 2017
Kimberlin was first registered in 1992 with FINRA member firm MetLife Securities, Inc., where he remained until his February 2016 termination. During his registration with MetLife Securities, he was also employed by the affiliated Metropolitan Life Insurance Company. The AWC asserts that "Kimberlin has no prior disciplinary history in the securities industry."
October 2013 Customer LoansThe AWC asserts that since September 2013, MetLife's written policies prohibited its representatives from borrowing money or securities from a client without exception for clients who were also family members or personal friends of the firm's representatives.
Customer SW
The AWC alleges that in October 2013, Kimberlin solicited a $20,000 loan from an individual who is described as a 71-year-old MetLife Securities customer "unsophisticated in financial matters." The AWC references this customer as "Customer SW." The alleged purpose of the loan was to finance a real estate investment business that Kimberlin had purportedly started.
Customer SW allegedly wrote a $20,000 check to Kimberlin, and the Respondent is described as having:
assisted Customer SW in arranging an early withdrawal from her annuity policy, causing her to incur surrender charges and tax penalties totaling approximately $4,400. Customer SW wrote a check to Respondent in the amount of $20,000. To document the $20,000 loan, Respondent provided Customer SW with a loan document dated October 21, 2013 that he signed calling for the loan to be repaid over 24 months and for the payment of interest at rates ranging from 20% to 5% depending on how long the loan was outstanding.
Customer VI
The AWC alleges that in October 2013, Kimberlin solicited a $10,000 loan from an individual who is described as a 76-year-old MetLife Securities customer The AWC references this customer as "Customer VI." The alleged purpose of the loan was to finance a real estate investment business that Kimberlin had purportedly started.
Customer VI wrote a $10,000 check to Kimberlin.. The loan was memorialized in a document executed by Kimberlin, his wife, and Customer VI, and dated October 21, 2013, which set forth repayment in six months at 20% interest.
Misuse of LoansThe AWC asserts that Kimberlin misused the $30,000 in loans from Customers SW and VI to pay down the balance on his credit cards and did not repay said loans.
Misrepresentations
The AWC asserts that from 2013 through 2016, MetLife Securities required its registered representatives to complete Annual Certifications, which, in pertinent part, required certification of the reps' understanding of certain prohibited practices and an agreement that they had not and would not engage in those practices.
The AWC alleges that one day after soliciting and accepting the $30,000 in customer loans described above, on October 22, 2013, Kimberlin falsely certified on the 2013 Annual Certification that he had not and would not engage in the prohibited practice of borrowing money or securities from a client. Thereafter, the AWC alleges that Kimberlin falsely certified the same compliance on his 2014 and 2015 Annual Certifications.
Outside Business Activity
The LLC
The AWC alleges that sometime around November 2013, Kimberlin established the "Kimberlin N Vest RS LLC," for which he was a Director and Manager and the entity purportedly remains active. The AWC alleges that Kimberlin listed the LLC on his 2013 and 2014 Schedule C of his IRS Form 1040 and reported losses for 2013: $24,096, and 2014: $16,910. Kimberlin's conduct with the above LLC is characterized by the AWC as involving an "outside business activity" ("OBA") and, he allegedly failed to properly disclose to his firm said OBA from its inception in 2013 through February 2016.
Sports Officiating
The AWC also asserts that Kimberlin:
participated in a business involving sports officiating since 1969 and continues to participate in those activities to date. He failed to disclose his participation in this outside business activity when he first joined the Firm in 1992 or at any time prior to August 2008. Respondent listed his sports officiating activities on a Schedule C filed with his IRS Form 1040 since at least 2013 through 2016. The sports officiating-related Schedule C Forms filed by Respondent during this three-year period reported profits ranging from approximately $1,300 to $1,800. . .
Discharge
Online FINRA BrokerCheck records as of September 18, 2017, disclose that MetLife had "discharged" Kimberlin on February 24, 2016, based upon allegations that:
The registered representative did not follow firm policy with respect to loans from customers.
Violations
FINRA deemed that Kimberlin's:
- solicitation and acceptance of $30,000 in loans from two customers violated his firm's procedures and constituted further violations of FINRA Rule 3240 and 2010;
- misrepresentations about borrowing from customers on his 2013, 2014 and 2015 Annual Certification in violation of FINRA Rule 2010; and
- failure to disclose to his firm his OBAs involving real estate investing and sports officiating constituted violations of FINRA Rules 3270 and 2010 (from November 2013 through February 2016) and NASD Rules 3030 (from February 1992 through August 2008) and FINRA Rule 2110 (from at least July 1996 through August 2008).
In accordance with the terms of the AWC, FINRA imposed upon Kimerlin a $15,000 fine and an 18 month suspension from association with any FINRA member broker-dealer in any capacity.
Bill Singer's Comment
I sincerely want to compliment FINRA for issuing a comprehensive AWC that offers excellent content and context. I can't ask for more or less. Spot on! Nice job!!
That being said (sigh), I do need to make one criticism. Y'all really, really, really needed to include that somewhat idiotic and pathetic charge of Kimberlin having engaged in sports officiating for which he was paid less than $2,000 for three years of work? Seriously? Wasn't that a bit like hitting your opponent when he's down and after the ref called the fight because you had beaten the guy to the point where he didn't know the day of the week or his own name?
VISIT the BrokeAndBroker.com Blog "Borrowing" Archive
PDF Copy of Bill Singer, Esq.'s Borrowing Rule Analysis
VISIT the BrokeAndBroker.com Blog "OBA" Cases Archive