Initiated By
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
Allegations
NASD RULES 2110, 2120 AND 2310 (FORMERLY ARTICLE III, SECTIONS 1, 2 AND 18 OF THE RULES OF FAIR PRACTICE) - RESPONDENT KUNZ OFFERED AND SOLD TO MEMBER OF THE PUBLIC SECURITIES BY MEANS OF A PRIVATE PLACEMENT MEMORANDUM OR PRIVATE PLACEMENT MEMORANDA THAT CONTAINED A MATERIAL MISREPRESENTATION OF FACT AND OMITTED TO DISCLOSE MATERIAL INFORMATION; KUNZ, OFFERED AND SOLD TO MEMBERS OF THE PUBLIC SECURITIES THAT WERE NEITHER REGISTERED PURSUANT TO SECTION 5 OF THE SECURITIES ACT OF 1933 NOR EXEMPT FROM REGISTRATION; KUNZ RECOMMENDED AND SOLD SECURITIES TO PUBLIC CUSTOMERS FROM WHOM SUCH RECOMMENDATINS AND TRANSACTIONS WERE UNSUITABLE IN VIEW OF THE CUSTOMERS' FINANCIAL SITUATION AND NEEDS; KUNZ PERMITTED AN UNREGISTERED PERSON TO RECOMMEND SECURITIES TO CUSTOMERS OF THE FIRM WHOM SUCH RECOMMENDATIONS WERE UNSUITABLE IN VIEW OF THE CUSTOMERS' FINANCIAL SITUATION AND NEEDS; EXECUTED FOR SUCH CUSTOMERS THE TRANSACTIONS IN SECURITIES THAT RESULTED FROM THE UNSUITABLE REOMMENDATIONS MADE BY THE UNREGISTERED PERSON; AND, KUNZ COMPENSATED AN UNREGISTERED PERSON $89,000 IN CONNECTION WITH OFFERS AND SALES OF SECURITIES.
Resolution
Decision
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Sanctions
Monetary Penalty other than Fines
Sanctions
Requalification
Sanctions
Suspension
Regulator Statement
DECISION RENDERED 11/3/1997 WHEREIN KUNZ IS CENSURED AND FINED $30,000, JOINTLY AND SEVERALLY (J&S); FINED $5,000, INDIVIDUALLY; SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY PRINCIPAL CAPACITY FOR ONE YEAR; SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY FOR ONE MONTH; REQUIRED TO REQUALIFY BY EXAM AS A PRINCIPAL BEFORE FUNCTIONING IN A PRINCIPAL CAPACITY AFTER THE CONCLUSION OF THE PRINCIPAL SUSPENSION AND AS A REPRESENTATIVE WITHIN 90 DAYS OF THE CONCLUSION OF HIS SUSPENSION AS A REPRESENTATIVE OR CEASE TO FUNCTION IN ANY REPRESENTATIVE CAPACITY UNTIL HE SO REQUALIFIES; AND ASSESSED COSTS OF $2,597.20, J&S. THE PORTION OF THE FIRST CAUSE OF COMPLAINT REGARDING VIOLATIONS OF CONDUCT RULE 2120 WAS DISMISSED IN THAT THE COMMITTEE CONCLUDED THAT KUNZ DID NOT ACT WITH SCIENTER. IF NO FURTHER ACTION, DECISION IS FINAL 01/05/1998. * 11/12/1997 - APPEALED TO THE NBCC. * NAC DECISION RENDERED 7/7/1999, WHEREIN THE FINDINGS AND SANCTIONS ARE AFFIRMED IN PART AND MODIFIED IN PART; THEREFORE, KUNZ IS FINED $20,000, J&S, FINED $5,000, INDIVIDUALLY, SUSPENDED FROM ASSOCIATION WITH ANY NASD MEMBER IN A REPRESENTATIVE CAPACITY FOR 30 DAYS AND IN A PRINCIPAL CAPACITY FOR ONE YEAR, TO RUN CONCURRENTLY, IMPOSED HEARING COSTS OF $2,597.20, J&S, ORDERED TO REQUALIFY BY EXAMINATION AS A REPRESENTATIVE WITHIN 90 DAYS OF THE CONCLUSION OF HIS SUSPENSION AS REPRESENTATIVE OR CEASE TO FUNCTION IN ANY REPRESENTATIVE CAPACITY UNTIL HE SO REQUALIFIES AND ALSO ORDERED TO REQUALIFY AS A PRINCIPAL BEFORE FUNCTIONING IN SUCH CAPACITY. THE NAC REVERSED AND DISMISSED, HOWEVER, THE DBCC'S FINDING THAT RESPONDENT VIOLATED RULES 2110 AND 2310 BY MAKING UNSUITABLE RECOMMENDATIONS TO CUSTOMERS. THE NAC AFFIRMED THE DBCC'S DISMISSAL OF THE FIRST CAUSE OF ACTION THAT IT ALLEGED A VIOLATION OF CONDUCT RULE 2120. IF NO FURTHER ACTION, DECISION IS FINAL 8/6/1999. *ON 7/29/99 APPEALED TO THE SEC. *01/16/02 THE SEC UPHELD THE NAC'S FINDINGS AND SACTIONS. *03/13/02 APPEALED TO 10TH CIR. *03/28/03 U.S. COURT OF APPEALS FOR THE TENTH CIRCUIT DECISION IN KUNZ V. SEC AFFIRMED A SECURITY AND EXCHANGE COMMISSION DECISION, WHICH HAD UPHELD THE NATIONAL ADJUDICATORY COUNCIL'S DECISION. THE NAC IMPOSED A $20,000 FINE, JOINT AND SEVERAL, ON THE FIRM AND KEVIN KUNZ, AND A $5,000 FINE ON KUNZ INDIVIDUALLY. THE NAC SUSPENDED KUNZ FOR 30 DAYS IN ALL CAPACITIES AND FOR ONE YEAR IN A PRINCIPAL CAPACITY. THE NAC ALSO ORDERED THAT KUNZ REQUALIFY IN ALL CAPACITIES. THE SUSPENSION IN ALL CAPACITIES WILL COMMENCE WITH THE OPENING OF BUSINESS ON MAY 5, 2003 AND WILL CONCLUDE AT THE CLOSE OF BUSINESS ON JUNE 3, 2003. THE SUSPENSION IN A PRINCIPAL CAPACITY WILL COMMENCE WITH THE OPENING OF BUSINESS ON MAY 5, 2003 AND WILL CONCLUDE AT THE CLOSE OF BUSINESS ON MAY 4, 2004. FINE PAID 08/20/2003.
Broker Comment
DECISION BY THE TENTH CIRCUIT COURT OF APPEALS TO UPHOLD THE SUSPENSION AND FINE. THE COURT DID NOT WANT TO OVERTURN A AN SRO DECISION. IMC AND KEVIN KUNZ DOES NOT AGREE.
SUSPENSION PERIOD WAS COMPLETED AND SUCCESSFUL RETESTING FOR SERIES 7 WAS COMPLETED.