Initiated By
FINRA
Allegations
SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 10B-5, FINRA RULES 2010, 2020, 2150, 8210, NASD RULES 2110, 2120, 2310, 2330, 3040: MCKEE KNOWINGLY AND RECKLESSLY INDUCED CUSTOMERS, THROUGH MATERIAL MISREPRESENTATIONS AND OMISSIONS, AND THROUGH THE USE OF THE MEANS AND INSTRUMENTALITIES OF INTERSTATE COMMERCE, AND OF THE MAILS, TO INVEST IN SECURITIES CONCERNING VARIOUS REAL ESTATE VENTURES. MCKEE KNOWINGLY AND RECKLESSLY INDUCED HIS MEMBER FIRMS' CUSTOMERS, THROUGH MATERIAL MISREPRESENTATIONS AND OMISSIONS, TO INVEST A TOTAL OF $372,000 IN VARIOUS OUTSIDE REAL ESTATE VENTURES IN WHICH HE HAD A DIRECT OR INDIRECT FINANCIAL INTEREST. MCKEE IMPROPERLY USED OR CONVERTED CUSTOMER FUNDS, WITHOUT THE CUSTOMERS' KNOWLEDGE OR CONSENT, FOR HIS OWN USE AND BENEFIT. MCKEE IMPROPERLY USED OR CONVERTED $652,215.36 BELONGING TO CUSTOMERS FOR HIS OWN USE AND BENEFIT. MCKEE IMPROPERLY USED MOST OF THESE FUNDS TO PAY OFF A CUSTOMER, AFTER THE CUSTOMER THREATENED HIM WITH LEGAL ACTION, AND CONVERTED THE BALANCE OF THESE FUNDS TO HIS OWN USE AND BENEFIT. MCKEE RECOMMENDED THAT A LOCAL CHURCH WITH NO INVESTMENT EXPERIENCE INVEST $100,000 IN ONE OF HIS VENTURES, A SMALL, HIGH-RISK, START-UP VENTURE. MCKEE'S INVESTMENT RECOMMENDATION WAS INCONSISTENT WITH THE CHURCH'S STATED INVESTMENT OBJECTIVES AND FINANCIAL NEEDS. MCKEE SOUGHT TO DISGUISE THE UNSUITABLE NATURE OF THE INVESTMENT BY RECORDING FALSE SUITABILITY INFORMATION, INCLUDING FALSE ASSETS, INVESTMENT OBJECTIVES AND RISK TOLERANCES, ON THE CHURCH'S ACCOUNT DOCUMENTS. THE START-UP VENTURE LATER FILED FOR BANKRUPTCY AND THE CHURCH LOST ALL OF ITS $100,000 INVESTMENT. MCKEE LIED TO A MEMBER FIRM, FALSELY INDICATING IN A SERIES OF ANNUAL QUESTIONNAIRES THAT HE HAD DISCLOSED ALL OF HIS OUTSIDE BUSINESS ACTIVITIES, WHEN IN FACT HE HAD FAILED TO DISCLOSE HIS OUTSIDE ACTIVITIES IN SEVERAL OF HIS OUTSIDE BUSINESS ACTIVITIES AND FAILED TO DISCLOSE HIS ONGOING SOLICITATION OF FIRM CUSTOMERS TO INVEST IN THESE VENTURES. MCKEE ENGAGED IN PRIVATE SECURITIES TRANSACTIONS INVOLVING OUTSIDE REAL ESTATE VENTURES. MCKEE SOLICITED INVESTMENTS IN THESE OUTSIDE VENTURES WITHOUT NOTIFYING OR OBTAINING PRIOR APPROVAL FROM HIS FIRMS. MCKEE FAILED TO PRODUCE DOCUMENTS AND INFORMATION REQUESTED BY FINRA. MCKEE LIED TO FINRA DURING HIS SWORN ON-THE-RECORD TESTIMONY, FALSELY STATING THAT HE DID NOT SOLICIT INVESTMENTS IN SOME OUTSIDE REAL ESTATE VENTURES, WHEN IN FACT HE HAD SOLICITED CUSTOMERS TO INVEST IN THESE VENTURES.
Resolution
Decision
Bar
Bar (Permanent)
Registration Capacities Affected
All Capacities
Duration
Indefinite
Start Date
10/11/2012
Sanctions
Restitution
Amount
$872,000.00
Regulator Statement
DEFAULT DECISION RENDERED SEPTEMBER 13, 2012 WHEREIN MCKEE IS BARRED FROM ASSOCIATION WITH ANY FINRA MEMBER IN ANY CAPACITY FOR: (I) KNOWING AND RECKLESSLY INDUCING CUSTOMERS TO MAKE INVESTMENTS BY MAKING MATERIAL MISREPRESENTATIONS AND OMISSIONS, THROUGH THE USE OF THE MEANS AND INSTRUMENTALITIES OF INTERSTATE COMMERCE AND OF THE MAILS, IN VIOLATION OF SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RULE 10B-5 THEREUNDER, NASD RULES 2120 AND 2110, AND FINRA RULES 2020 AND 2010; (II) CONVERTING CUSTOMER FUNDS, IN VIOLATION OF NASD RULES 2330 AND 2110, AND FINRA RULES 2150 AND 2010; (III) MAKING AN UNSUITABLE INVESTMENT RECOMMENDATION, IN VIOLATION OF NASD RULES 2310 AND 2110, AND FINRA RULE 2010; (IV) MAKING FALSE STATEMENTS TO HIS MEMBER FIRM, IN VIOLATION OF FINRA RULE 2010; (V) ENGAGING IN PRIVATE SECURITIES TRANSACTIONS WITHOUT NOTIFYING OR OBTAINING PRIOR APPROVAL FROM HIS FIRM, IN VIOLATION OF NASD RULES 3040 AND 2110, AND FINRA RULE 2010; (VI) FAILING TO PRODUCE DOCUMENTS AND INFORMATION REQUESTED BY FINRA STAFF, IN VIOLATION OF FINRA RULES 8210 AND 2010; AND (VII) TESTIFYING FALSELY DURING AN ON-THE-RECORD INTERVIEW, IN VIOLATION OF FINRA RULES 8210 AND 2010. IN ADDITION, MCKEE IS ORDERED TO PAY RESTITUTION TOTALING $872,000, PLUS INTEREST, TO CUSTOMERS. THE DECISION IS FINAL OCTOBER 11, 2012.
