FINRA

Harrington was named a respondent in a FINRA complaint alleging that he converted customer funds by intentionally and without authorization taking and exercising ownership over $19,874.64 belonging to one of his customers when he neither owned the property nor was entitled to possess it. The complaint alleges that Harrington engaged in a series of private securities transactions with at least two individuals through which he sold over 300,000 shares of restricted stock he had purportedly received as compensation from a company for approximately $276,000. Harrington failed to provide his member firm with prior written notice of his private securities transactions, including his proposed role as seller in the transactions. The complaint also alleges that Harrington lied to his firm when he mischaracterized the purpose of payments received into his bank accounts. Specifically, Harrington falsely characterized three payments received from one of the individuals for the purchase of the stock as vacation-rental-by-owner (VRBO) income. Harrington also falsely characterized the $100,000 payment he received from the other individual for the purchase of stock as a payment from his former broker-dealer. In addition, Harrington knowingly caused at least two falsified VRBO rental contracts to be sent to his firm in order to conceal the true purpose of funds he had received in private securities transactions. The complaint further alleges that as FINRA began investigating him, Harrington continued to actively conceal his misconduct with the knowing assistance of his assistant. Specifically, at Harrington's direction or with his knowledge and consent, his assistant altered certain bank statements requested by FINRA in order to conceal the originator of a payment Harrington received for the stock. Harrington, by and through his attorney, submitted the altered bank statement to FINRA as if it were an authentic, non-altered document. In addition, during his investigative testimony, Harrington falsely and repeatedly insisted that the fake VRBO agreements he had created were authentic and represented legitimate rental transactions. Additionally, Harrington submitted to FINRA a written response which falsely stated that he was entitled to the approximately $20,000 he took from the customer, as payment for investment advisory services rendered to her. In addition, the complaint alleges that after he learned that FINRA was investigating his conversion of the customer's funds, Harrington contacted the customer and attempted to have her sign a false document stating that he was entitled to the money he stole.

Decision

Bar (Permanent)

All Capacities

Indefinite

12/31/2018

Disgorgement

$190,974.64

Monetary Penalty other than Fines

$10,453.21

Restitution

$105,000.00

Extended Hearing Panel Decision Rendered November 12, 2018. The sanctions are based on the findings that Harrington converted customer funds, intentionally causing the customer to wire $19,874.64 of her funds into his account. The findings stated that Harrington took the funds for his own use, without the customer's authorization, and never returned them. Harrington attempted to obstruct FINRA's investigation into his conversion by contacting the customer and asking her to sign a false document stating that she had stayed at his vacation rental property. The findings also stated that Harrington engaged in private securities transactions, which he was compensated for, without giving prior notice to or receiving prior written approval from, his member firm. Harrington sold private securities transactions that were outside the regular scope or course of his employment to at least two individuals. Harrington did not sell the securities through his firm and it did not supervise the sales. Further, Harrington was compensated for charging approximately $276,000 in sales to two purchasers. The findings also included that Harrington provided false documents to his firm in connection with its investigation into whether he had engaged in outside business activities. Harrington intentionally misrepresented the nature of payments he received and deposited into his bank accounts as rental income and a payment from his former broker dealer. In fact, the payments were for the purchase of stock in Harrington's outside business. Harrington knowingly caused falsified rental contracts to be sent to his firm in order to conceal the true purpose of the funds he had received. FINRA found that Harrington also provided false and misleading documents and information to FINRA in connection with its investigation of the private securities transactions and the conversion. Harrington produced a bank statement to FINRA that his sales assistant, under his direction, altered to remove a customer's name as the originator of a wire transfer. Harrington also submitted a written response to FINRA that falsely represented he was entitled to the funds he directed the customer to wire to him claiming it was payment for investment advisory fees rendered to the customer. Harrington also falsely testified that the purported rental agreements with another customer were authentic and represented legitimate rental transactions. The decision became final on December 31, 2018.

Rep intends to vigorously defend himself against any charges or claims brought by FINRA pursuant to this matter.

POOR RECOMMENDATION/ADVICE

$15,000.00

COMMON LAW FRAUD, MISREPRESENTATION, UNSUITABILITY, EXCESSIVE TRADING, CHURNING, OVER CONCENTRATION, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT, NEGLIGENCE, FORGERY

$410,000.00

$85,000.00

NATIONAL SECURITIES CORP

Discharged

Internal Review regarding the appearance of conversion of client funds.

Claimants allege that, from approximately 2005 to 2009, one of Claimants' registered representative recommended illiquid, speculative, and high-commission investments. One claimant alleges that a different registered representative engaged in excessive trading and unauthorized trades. Claimants allege unsuitability, misrepresentation, churning, and failure to supervise.

$2,400,000.00

$20,092.00

The statement of claim filed by the [Redacted], which does not include express claims against me, contains an inaccurate description of facts that erroneously identifies me as the registered representative that handled the [Redacted] account. In fact,I was not involved at First Allied in the handling of this account and was not involved in the transactions complained of. The balance of the arbitration claim, which includes allegations by other customers, does not pertain to me at all.

NEGLIGENT MISREPRESENTATION,BREACH OF FIDUCIARY DUTY,

$200,000.00

$105,000.00

MISREPRESENTATION, OMISSIONS

$75,066.88

$15,000.00

FINRA

FINRA BY-LAWS ARTICLE V, SECTION 2(C), FINRA RULES 1122, 2010: HARRINGTON FILED A PERSONAL BANKRUPTCY PETITION AND FAILED TO DISCLOSE THAT MATERIAL FACT ON HIS FORMS U4.

Acceptance, Waiver & Consent(AWC)

Suspension

ALL CAPACITIES

30 DAYS

1/22/2013

2/20/2013

WITHOUT ADMITTING OR DENYING THE FINDINGS, HARRINGTON CONSENTED TO THE DESCRIBED SANCTION AND TO THE ENTRY OF FINDINGS, THEREFORE HE IS SUSPENDED FROM ASSOCIATING WITH ANY FINRA MEMBER IN ANY CAPACITY FOR 30 DAYS. NO MONETARY SANCTION WAS ASSESSED IN THIS MATTER. THE SUSPENSION IS IN EFFECT FROM JANUARY 22, 2013, THROUGH FEBRUARY 20, 2013.

MATRIX CAPITAL GROUP, INC.

Permitted to Resign

RR WAS PERMITTED TO RESIGN UPON THE FIRM'S DETERMINATION THAT HE HAD FAILED TO TIMELY DISCLOSE A REPORTABLE EVENT ON HIS FORM U4 AND ON AN INTERNAL ANNUAL CERTIFICATION.

IN 2011 CUSTOMER CLAIMS RR DID UNAUTHORIZE TRADES, WANTS TRADES CANCELED

$5,001.00

***SHOULD BE ARCHIVED, OVER 24 MONTHS OLD***

THE CLAIMANT ALLEGES THAT MR. HARRINGTON MADE UNAUTHORIZED TRADES AND CHARGED EXCESSIVE COMMISSIONS. CLAIMANT SEEKS REIMBURSEMENT OF APPROXIMATELY $50,000 IN COMMISSIONS

$50,000.00

$25,000.00

IN 2002, THE CLAIMANT SUBMITTED A WRITTEN COMPLAINT ALLEGING SALES PRACTICE VIOLATIONS AGAINST HIS ACCOUNT EXECUTIVE, KYLE HARRINGTON. MR. HARRINGTON'S U-5 WAS DULY UPDATED. BY LETTER IN 2003, CIBC DENIED THE CUSTOMER COMPLAINT. THE DENIAL WAS DULY NOTED ON MR. HARRINGTON'S U-5. IN 2004, THE CLAIMANT'S ATTORNEY CONTACTED CIBC, SEEKING TO SETTLE THE GRIEVANCE BEFORE FILING AN ARBITRATION CLAIM. CIBC SETTLED THE MATTER FOR $25,000 ON APRIL 8, 2004. MR. HARRINGTON WAS NOT INVOLVED IN THE SETTLEMENT. ON APRIL 8, 2004, CIBC SETTLED THE COMPLAINT FOR $25,000. MR. HARRINGTON DID NOT PARTICIPATE IN THE SETTLEMENT. ALTHOUGH MR. HARRINGTON WAS NOT DISMISSED OR WITHDRAWN FROM THE COMPLAINT, HE DID NOT CONTRIBUTE TO THE SETTLEMENT.

CUSTOMER ALLEGES THAT MR. HARRINGTON EFFECTED 10(B)18 RE-PURCHASES OF SHARES OF CUSTOMER'S STOCK WITHOUT AUTHORIZATION. CUSTOMER SEEKS THE CANCELLATION OF THESE PURCHASES AT A COST OF $12,500.

$12,500.00

RR SET UP A 10B5-1 PLAN FOR [CUSTOMER]. IT WAS INTENDED TO BE A SYSTEMATIC SALE OF MOBI STOCK FOR THE COMPANY. THE TRADING DES FOR CIBC ENTERED AN ORDER DURING A RESTRICTED PERIOD BY ACCIDENT. THIS ENDED UP ON RR'S FILE AND CIBC PAID APPROXIMATELY $10,000-$25,000 TO [CUSTOMER]. THE COMPLAINT IS SETTLED AND NO LONGER PENDING.

$25,000.00

$15,000.00