November 19, 2020
On October 15, 2020, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement imposed sanctions on Kevin Barletta, general securities representative currently associated with Royal Alliance Associates, Inc. in Hawthorne, New York.
From October 2015 to January 2017, Barletta was previously associated with LPL Financial LLC, a brokerage firm also located in Hawthorne, New York. His FINRA BrokerCheck report reveals that he was discharged after the firm “reasonably concluded that [he] failed to adhere to policy regarding cross-trades.” Shortly thereafter, FINRA Department of Enforcement began investigating his departure.
According to the Letter of Acceptance, Waiver and Consent (AWC), Barletta circumvented his firm’s written supervisory procedures in connection with prohibited cross trades of alternative investment products. Barletta allegedly falsified journal entry forms to effect unlisted real estate investment trust (REIT) sales from one customer account to two customer accounts, in violation of FINRA Rule 2010. Unlisted REITs are trust shares that do not trade on national securities exchange, and thus, these trades are generally illiquid and hold a higher risk for investors. Barletta altered the forms that he had the customers complete for the trade to say that the parties to the transactions were “friends” and described the transfer of shares as “gifts.” In reality, the parties did not know each other and the false information on these entry forms prevented LPL from detecting the prohibited transactions. The Department of Enforcement also asserts that Barletta caused LPL to maintain inaccurate books and records, thus he also violated FINRA Rules 4511 and 2010.
Without admitting or denying the allegations made against him, Barletta consented to a two-month suspension and $5,000 fine. FINRA also requires him to attend 20 hours of continuing education concerning unlisted REITs, suitability, recordkeeping requirements, and ethical considerations.
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