Kevin & Sean Kane: SEC Charges Ex-Waddell & Reed Advisors

The Securities and Exchange Commission recently filed fraud charges against York, Pennsylvania-based advisors Kevin Kane (CRD# 2269484) and Sean Kane (CRD# 5778281). Financial Industry Regulatory Authority records indicate that the father-and-son advisory team are currently registered with Cambridge Investment Research and were formerly registered with Waddell & Reed. The latter firm terminated their registrations in February 2021 in connection with alleged violations of firm policies “including outside business activities, communications with the public and client/data privacy.”

According to an SEC press release published on March 2, 2023, the regulator alleges that after Waddell & Reed fired the Kanes in February 2021, they falsely represented to certain clients “that they left their former firm voluntarily” as part of an effort to persuade these clients “to join them at a new firm.” The SEC alleges further that the advisors falsely represented to certain clients “that they were still associated with their former firm and could still access client accounts.” As part of this effort, the SEC alleges, they “impersonated certain clients” while making phone calls to their former firm with the purpose of effecting trades in those customers’ accounts.

The SEC’s complaint itself, filed in the US District Court for the Middle District of Pennsylvania, states that the Kanes worked with “more than one hundred clients” at their former firm, managing more than $27 million in collective assets. They “worked together as a team,” according to the SEC, sharing both clients and compensation they received for their advisory services. They were terminated following the firm’s findings that they had violated its policies as well as industry rules and regulations, the complaint states, going on to describe determinations that they “had undisclosed outside business associations with a third-party” and that they “shared client with a third-party” in violation of firm rules and SEC regulations. In connection with these allegations, the SEC charged the Kanes with violations of antifraud positions of the Investment Advisers Act of 1940, seeking permanent injunctions and civil penalties against them.

According to the Financial Industry Regulatory Authority, Kevin Kane holds 30 years of securities industry experience and has been registered with Waddell & Reed in York, Pennsylvania since 2021. His registration history includes Waddell & Reed, Wells Fargo Advisors, Citigroup Global Markets, and Lehman Brothers. He has passed four securities industry qualifying exams and holds licenses in Florida, Maryland, North Carolina, Pennsylvania, South Carolina, and Washington. FINRA records show that Sean Kane, meanwhile, holds 12 years of securities industry experience and has also been registered with Waddell & Reed’s York office since 2021. His registration history includes Waddell & Reed, Resource Securities, Cohen & Steers Securities, Prudential Investment Management Services, and Lincoln Financial Distributors. He has passed five securities industry qualifying exams and holds licenses in Arizona, Florida, Indiana, Maryland, North Carolina, Pennsylvania, South Carolina, Virginia, and Washington. (Information current as of March 6, 2023.)

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