Stoltmann Law Offices is investigating Kimberly Kitts, a former Royal Alliance broker who was terminated from the firm concerning allegations that she misappropriated client funds. Royal Alliance stated that it received notice from one of her clients who said that Kitts had converted or misappropriated funds. Kitts also may have engaged in outside business activities including those with Marquis Consulting, which is an investment related activity involved in business valuation, and she disclosed involvement as a trustee for an estate and also a volunteer for a non-profit company called Center for Coastal Studies. These allegations concerning conversion and engaging in outside business activities and private securities transactions, are often accompanied by claims of “selling away” within the industry. This is when a broker recommends or sells a security that is not held or offered by her member firm. She does this in order to not have to share the commissions with her firm. Selling away is against securities laws and internal firm rules.
When advisors convert or misappropriate funds they often create businesses to serve as a cover for the theft. Federal securities laws and laws within the Financial Industry Regulatory Authority (FINRA) state that firms must monitor and supervise their employees in order to detect and prevent their brokers from offering investments in this way. “Selling away” occurs when brokerage firms either fail to put in place a reasonable supervisory system to oversee their brokers, or fail to actually implement that system. This can result in unsupervised misconduct and with advisors violating rules. The brokerage firm may be liable for investment losses if it allows its’ employees to transgress. The firm may be sued on a contingency fee basis to recover losses.
Kimberly Kitts, according to public records with FINRA, was previously registered with ING Financial Partners in Des Moines, Iowa from January 2003 until April 2004, and Royal Alliance Associates in Palmer, Massachusetts from April 2004 until November 2017. She has four customer disputes against her, and one regulatory matter. She has been permanently barred from the industry.
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