Former Kalos Capital Advisor Discharged from Employment by Prudential Following Customer Complaint
According to publicly available information, on September 2, 2020, financial advisor Christopher J. Shaw (CRD# 5011382) was discharged from employment with Pruco Securities, LLC (Prudential). Specifically, Mr. Shaw was terminated from his position following a customer dispute concerning allegations that he effected discretionary trades in a customer’s account, and further, purportedly “inaccurately marked certain trades as unsolicited when they were solicited.” In general, financial advisors like Mr. Shaw may only engage in discretionary trading, or the practice of trading in a customer’s account without first contacting the client, when the customer has already granted the financial advisor written authorization to do so and the advisor’s firm has approved the account for discretionary trading.
Mr. Shaw first entered the securities industry as a stockbroker in 2005. From September 2011 to May 2019, he was affiliated with Kalos Capital, Inc. and Kalos Management of Belmont, North Carolina (Kalos), as a dually registered broker and investment adviser. From May 2019 until his discharge from employment in September 2020, Mr. Shaw was affiliated with Prudential. Most recently, since September 2020, Mr. Shaw has been employed by Newbridge Securities Corporation (Newbridge) in their Belmont, North Carolina branch office.
According to information disclosed through FINRA BrokerCheck, Mr. Shaw has been named or otherwise involved in a total of four customer disputes over the course of his career, including three disputes which remain pending as of this writing. The most recently initiated customer dispute concerns allegations that Mr. Shaw purportedly steered his client into a private placement investment despite the fact that the investor “did not qualify as an accredited investor when [the] solicitation was made in September 2016.” Furthermore, in July 2019, a customer dispute against Mr. Shaw settled for $175,000 and concerned allegations that he had recommended “unsuitable investments in alternative securities between 11/2012 and 05/2017.” According to Mr. Shaw’s own comments as disclosed on FINRA BrokerCheck, these alternative investments included certain non-traded REITs, a business development company (BDC), as well as certain “private equities for income.”
Under applicable FINRA rules, brokerage firms like Kalos, Prudential, and Newbridge have a legal obligation to supervise their employees and affiliated registered representatives. Specifically, under FINRA Rule 3110 (NASD Rule 3010), broker-dealers must “establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance” with applicable FINRA rules, in addition to state and federal securities laws. It is crucial that broker-dealers not only establish such a supervisory system, but moreover, properly maintain their supervision, by among other things, periodically meeting with individual financial advisors to discuss the products they are selling and their sales methods, as well as to examine correspondence with customers.
In instances where a customer suffers losses due to an unsuitable, or even fraudulent investment, then the brokerage firm may be held liable for any failure to adequately supervise their employee. The attorneys at Giarrusso Law Group LLC have significant experience in working closely with investors to resolve all manner of issues concerning investment losses, including losses suffered due to misconduct or wrongdoing by a financial advisor. Investors may pursue a claim to recover monies through securities arbitration before FINRA, or in some instances, through litigation. Investors who wish to discuss a possible claim are invited to contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation.