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FINRA Sanctions Ex-White Plains Advisor Russ Kory: Oil & Gas LPs
The Financial Industry Regulatory Authority has sanctioned former White Plains advisor Russ Kory (CRD# 5901185) over allegations he recommended unsuitable oil and gas investments. Financial Industry Regulatory Authority records show that he is not currently a broker or an investment advisor, though he was last registered with David Lerner Associates.
According to a Letter of Acceptance, Waiver, and Consent (No. 2019063686203) issued in September 2022, Russ Kory was affiliated with David Lerner Associates when, between 2015 and 2019, he advised three customers to invest in oil and gas limited partnerships “without having a reasonable basis to believe those illiquid investments were suitable for the customers.” FINRA explains that the investments were known as “blind pools,” a term describing limited partnership offerings that have not yet “identified any properties for acquisition.” The LPs promised a liquidity event five to seven years after the offerings terminated, FINRA states, noting that “[e]ach limited partnership’s ability to make return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the properties in which the partnerships invested.”
The products’ prospectuses described the investments as involving a “high” risk level. FINRA found that this risk was unsuitable for the three customers to whom Mr. Kory recommended the investments, one of whom was a “retired married couple” who used their investments through the firm in part “to provide for the long-term care for their disabled adult son.” The second customer, per FINRA, was an unemployed 86-year-old widow living on a fixed income who lived with her daughter. The third customer was the second customer’s son-in-law, according to FINRA, who was approaching retirement, did not have extensive investment experience, and was investing “to preserve funds for retirement.”
FINRA found that Mr. Kory’s recommendations to these customers were unsuitable, and that his actions constituted violations of FINRA Rules 2010 and 2111. It issued him a three-month suspension, a fine of $5,000, and disgorgement of $7,203 plus interest, that later figure corresponding with the commissions he allegedly received from the oil and gas investments.
Mr. Kory’s BrokerCheck report discloses one investor complaint against him. Filed in 2021, it alleged that as a David Lerner representative, he recommended an unsuitable Energy 11 private placement, breached his fiduciary duty, and misrepresented and omitted material facts. In July 2022 the complaint reached a settlement of $45,000.
According to the Financial Industry Regulatory Authority, Russ Kory holds 8 years of securities industry experience. Most recently based in White Plains, New York, he was last registered as a broker with David Lerner Associates, from 2011 until 2019. He has no previous registrations and is not currently registered as a broker or an investment advisor. (Information current as of September 5, 2022.)
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