Broker Complaints: KMS Financial Services (CRD# 3866)

The securities fraud law firm, Fitapelli Kurta, is currently investigating claims against broker-dealer firm, KMS Financial Services.

KMS Financial Services is an independent broker-dealer firm classified as a corporation. KMS Financial Services was formed in Washington in 1969. KMS Financial Services’ current main office is located at 2001 Sixth Ave Suite 2801 Seattle, Washington 98121. KMS Financial Services is registered with both the SEC and FINRA and is registered in 52 U.S. states and territories. KMS Financial Services has 325 financial advisors and $14 billion in assets under management. KMS Financial Services was acquired by Ladenburg Thalman in August 2014, but still operates as a separate entity.

KMS Financial Services has a history of FINRA violations and customer complaints. The following are several notable FINRA violations or customer complaints filed against KMS Financial Services or its brokers.

In November 2012, KMS Financial Services was fined $50,000 when two KMS Financial Services brokers sold $4.2 million of interested in a hedge fund to customers and KMS Financial Services $50,000 in incentive fees from the hedge fund’s general partner. From the $50,000 KMS Financial Services paid the two brokers $42,000, leaving KMS Financial Services with $7,000 in incentive fees. To make matter worse, KMS Financial Services relied solely on the opinions of the brokers and failed to conduct its own due diligence on the hedge fund. KMS Financial Services had not reason to believe the hedge fund was suitable for its customers and later became aware of several red flags regarding the hedge fund, but by that time the customers had already invested. Had KMS Financial Services conducted due diligence, as required by the SEC and FINRA, KMS Financial Services may not have been invested in such an unsuitable investment.

In December 2011 KMS Financial Services was fined $10,000 for failing to establish a customer identification program for its anti-money laundering compliance program. FINRA advised KMS Financial Services that KMS Financial Services needed to make significant changes in their anti-money laundering program in order to comply with FINRA rules, however KMS Financial Services brokers failed to make the changes.

In August 2010, KMS Financial Services was fined $50,000 and ordered to pay up to $975,000 in restitution to eight KMS Financial Services customers. According to KMS Financial Services’ BrokerCheck Report, KMS Financial Services broker, Arthur Leroy Heffelfinger, was running a Ponzi scheme out of KMS Financial Services. Arthur Leroy Heffelfinger was sentenced to 30 years in prison for conducting the Ponzi scheme and KMS Financial Services was fined for failing to supervise Arthur Leroy Heffelfinger while he was a registered broker at KMS Financial Services.

If you or someone you know has fallen victim to the financial misconduct of KMS Financial Services, Arthur Leroy Heffelfinger, or one of its other brokers, you may be entitled to full recovery of your losses. Many investors do not realize it, but the law provides investors with a path of recovery by way of arbitration through the Financial Industry Regulatory Authority (FINRA).

The law firm of Fitapelli Kurta prosecutes cases before FINRA arbitration panel for investors nationwide who have been victimized by broker-dealer firms like KMS Financial Services, or their brokers. The time to file a claim with FINRA is limited, so do not delay. Call 212-568-1502 now to speak directly to an attorney and discuss the merits of your case for free.

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