Kalos Capital: 1 Regulatory Complaint

Kalos Capital

Publicly available records published by the Financial Industry Regulatory Authority (FINRA) and accessed on June 12, 2019 indicate that Georgia-based brokerage firm Kalos Capital has received a regulatory sanction in connection to alleged rule violations. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Kalos Capital (CRD# 44337).

Established in California in 1997, Kalos Capital is headquartered in Alpharetta, Georgia and registered with 51 US states and territories. Organized as a corporation, the company’s fiscal year ends in December. It conducts 11 types of business, including: Broker or dealer retailing corporate equity securities over the counter; broker or dealer selling corporate debt securities; municipal securities broker; put and call broker or dealer or option writer; private placements; and broker selling public/private real estate investment trusts. According to its BrokerCheck report, the firm has received one regulatory sanction.

In 2012 FINRA sanctioned Kalos Capital in connection to allegations it permitted representatives in non-offices in its supervisory jurisdiction to engaged in the sending and receipt of securities-related electronic communications using outside email addresses. According to FINRA’s findings, the firm’s email retention system did not preserve communications from such outside email accounts, except in cases where they were sent from or forwarded to a system monitored by the firm. FINRA’s findings stated additionally that the firm lacked protocols that mandated the sending of duplicate email communications to a shared folder for the firm to review and retain; instead, according to FINRA’s findings, the firm relied on its representatives to forward duplicates of securities-related emails to firm systems. Furthermore, according to FINRA’s findings, the firm did not have any system providing for the monitoring of and guarantee that emails related to securities matters were forwarded for review and archival purposes; instead, according to FINRA, the firm depended on its branch auditing program to make sure emails were forwarded per requirements.

Moreover, according to FINRA’s findings, although the firm’s branch auditing program mandated the performance every three years of non-OSJ branch audits, Kalos Capital did not ensure that all relevant audiences were audited every three years, and none of the audits that were completed “raised any red flags or concerns regarding the use of outside email addresses.” The firm did not have a supervisory system adequately designed to ensure the review of all emails by a principal, which firm supervisory procedures required, or to ensure the review and approval by a principal of all outgoing emails. The sanction states that the firm did not review and approve securities-related electronic correspondence disseminated to public recipients by representatives in non-OSJ offices, and in so doing failed to enforce supervisory procedures concerning the securities-related emails sent by its representatives in the course of transacting securities business from non-OSJ offices. According to FINRA, Kalos Capital did not maintain securities-related emails from those non-OSJ offices because it lacked a system for the storage of registered representatives’ electronic communications in those offices in the required non-rewritable, non-erasable format. In connection with these findings, the firm was censured and issued a fine of $45,000.

If you or someone you know has lost money investing with Kalos Capital, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup your losses. Fitapelli Kurta accepts all cases on a contingency basis: we only get paid if and when you collect money. Time to file your claim may be limited, so we encourage you to avoid delay. Call 877-238-4175 now to speak to an attorney for free.