Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker/advisor, Yong Soo Kim (CRD # 1747849) and broker, Kayan Securities, Inc. (CRD # 156175) were recently sanctioned by FINRA’s Department of Enforcement after an investigation into failure to supervise and violation of the Best Interest Obligation under Rule 15I-1 of the Securities Exchange Act of 1934 (Regulation BI).

The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Yong Soo Kim and/or Kayan Securities, Inc.

Registration Background for Yong Soo Kim and Kayan Securities

Yong Soo Kim and Kayan Securities, Inc. Sanctioned by FINRA for Failure to Supervise and Reg BI ViolationsMr. Kim first became registered in the securities industry in 1987. He is currently registered with Los Angeles, CA based Kayan Securities, Inc. His prior registrations include MITAA Global Securities (CRD # 123074) from April 2007 to May 2011, ETECH Securities, Inc. (CRD # 104195) from August 2004 to April 2007 and HANMI Securities, Inc., (CRD # 25518) from April 2003 to December 2004.

Kayan Securities has been a member firm since November 2011 and engages in a general securities business.  It has two branch offices and 14 registered representatives.

FINRA’s Allegations

According to FINRA Letter of Acceptance, Waiver and Consent (AWC) dated May 16, 2024 (No. 2019064935602), Mr. Kim and Kayan Securities consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:

  • “From January 2018 through at least April 2021, Kayan [Securities] and [Mr.] Kim failed to establish, maintain, and enforce a supervisory system, including written supervisory procedures (WSPs), reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 and the Care Obligation of Rule 15l-1 of the Securities Exchange Act of 1934 (Regulation BI or Reg BI) as they pertain to excessive trading… ”
  • “As of June 30, 2020, Kayan [Securities] also violated Reg BI’s Compliance Obligation by not establishing, maintaining, and enforcing WSPs reasonably designed to achieve compliance with Reg BI”;
  • “From January 2018 through April 2021, Kayan [Securities] and [Mr.] Kim also failed to reasonably supervise a former firm registered representative (Representative 1), by failing to respond to red flags that Representative 1 had engaged in unauthorized and excessive trading in three customers’ accounts…”;
  • “Kayan [Securities] and [Mr.] Kim identified, or should have identified, red flags indicating that Representative 1 was engaged in unauthorized and excessive trading in the accounts of Customer 1, Customer 2 (who was a senior), and Customer 3, but failed to reasonably respond to these red flags”;
  • “[Mr.] Kim never contacted Customer 1 or Customer 3.  After Customer 1 complained about Representative 1’s trading to the firm in June 2019, Kayan [Securities] and [Mr.] Kim did not reasonably investigate the trading activity”;
  • “When Representative 1 engaged in similar trading in Customer 3’s account in 2019, [Mr.] Kim only had Representative 1 obtain a revised account application from Customer 3, changing the investment objective and risk tolerance to conform to the trading”;
  • “Then, when Representative 1 engaged in similar trading in Customer 2’s account in 2020, [Mr.] Kim waited until the account appeared on three monthly active account reports with a turnover rate above six before sending a letter to Customer 2 regarding his account activity, to which Customer 2 immediately responded and complained about unauthorized trading”
  • By virtue of their actions, Kayan Securities and Mr. Kim violated FINRA Rule 3110 regarding supervision, FINRA Rule 2010 regarding standards of commercial honor and principles of trade, and Exchange Act Rule 15I-1(a)(1) of the Securities Exchange Act of 1934 (Regulation BI).

FINRA Sanctions

As a result of such violations and in addition to the above-described findings and conclusions, FINRA’s May 16, 2024 AWC also indicates that Mr. Kim and Kayan Securities consented to the following sanction(s):

  • Mr. Kim:
    • a two-month suspension from association with any FINRA member in all capacities;
    •  a fine in the amount of $5,000.00; and
    • attend and complete 20 hours of continuing education (within 90 days of acceptance of the AWC).
  • Kayan Securities:
    • Censure;
    • Partial restitution in the amount of $50,000.00; and
    • Certification that the firm has remediated the issues identified in the AWC (within 90 days of acceptance of AWC).

Yong Soo Kim Has a History of Securities Industry Customer and Regulatory Complaints

In addition to Mr. Kim being suspended by FINRA from the securities industry regarding failure to supervise and violation of the Best Interest Obligation under Rule 15I-1 of the Securities Exchange Act of 1934 (Regulation BI), FINRA BrokerCheck for Mr. Kim reveals that he has history of customer complaints, customer-initiated arbitrations, and/or actions brought by regulators, including but not necessarily limited to the following:

  • On August 23, 2019, a customer-initiated arbitration was commenced against Mr. Kim regarding alleged actions that occurred while he was associated with Kayan Securities, Inc. The customer’s allegations included breach of contract, negligence, breach of fiduciary duty, churning, lack of suitability and unauthorized trading. The customer further alleged damages in the amount of $25,157.00. On January 13, 2020, Mr. Kim was found jointly and severally liable for $12,157.00, which represented avoidable commissions, and $600.00 as reimbursement of the filing fee for the arbitration.
  • On April 8, 2013, Mr. Kim entered into an AWC with FINRA and agreed to pay a $5,000.00 fine regarding violations of NASD Rule 2420 and FINRA Rule 2010 for sharing commissions with an unregistered person.
  • In December 1998, Mr. Kim entered into an AWC with FINRA and agreed to pay a $2,500.00 fine regarding violations of NASD Rule 1220(b) and NASD Rule 2110 for training and continuing education lapses and FINRA Rule 2010 for sharing commissions with an unregistered person

Have You Lost Money with Yong Soo Kim and/or Kayan Securities, Inc.?

If you or someone you know has or had a brokerage account with Mr. Yong Soo Kim and/or Kayan Securities, Inc. and have concerns regarding losses in your investments or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.