Banned broker continued advising clients: Regulator

The Ohio Division of Securities has issued a notice that it intends to file a cease-and-desist order against a banned broker who allegedly continued to act as an investment adviser.
According to the June 16 notification, Kevin O’Brien has been operating his own investment advisory firm — O’Brien Private Wealth Management LLC — despite being permanently barred from working in the securities industry nearly three years ago by the Financial Industry Regulatory Authority Inc. and not being registered in Ohio as an investment adviser.
Finra claimed that Mr. O’Brien, a former registered representative with Robert W. Baird & Co. Inc., stole more than $300,000 from a client while employed at Baird. Mr. O’Brien consented to the ban without admitting or denying Finra’s findings.
The client, Ross Brooks, was talking to police about filing criminal charges against Mr. O’Brien, according to Michael Houston, a detective with the Norwood police department in Cincinnati. Mr. Brooks committed suicide last July.
The rep also lost his investment adviser license after being terminated by Baird.
The day that Mr. O’Brien’s securities license was terminated by Finra — Sept. 17, 2008 — O’Brien Private Wealth filed an application with the state of Ohio for an investment adviser firm license. The application stated that the firm’s operations would include “financial planning services, portfolio management for individuals and businesses, and pension consulting services,” according to the state. In December 2008, the firm and Mr. O’Brien withdrew applications for investment adviser status, according to the notice.
Despite that, Ohio securities regulators claim that Mr. O’Brien reached out to former Baird customers from September 2008 through February 2010, ultimately signing up 15 clients. In addition, from September 2008 through Dec. 31, 2009, Mr. O’Brien filed 21 power-of-attorney forms with Charles Schwab Bank on behalf of his clients there, giving Mr. O’Brien the ability to access clients’ bank account and trade information, according to regulators.
But Mr. O’Brien defended his actions, stating that he was merely providing financial education information, such as budgeting and personal finance advice. Mr. O’Brien claims he never provided investment advisory services after Sept. 2008. “I’ve never provided investment advice in violation of state or federal laws,” he said.
But the state claims two of his clients, husband and wife William C. Lewis and Dorothy Lewis, paid Mr. O’Brien $800 for investment advice. The complaint states that Mr. O’Brien never informed the couple that he had been terminated by Baird or that he was not licensed to give investment advice in Ohio.
Mr. O’Brien has created a stir in the Cincinnati area. In November 2009, he was elected to a four-year term as an Anderson Township trustee. In this position, he and two other trustees manage the town finances and oversee its fire and police departments, plus payments for its roadways.
After learning that Mr. O’Brien had been barred from the securities industry, a group of Anderson Township citizens petitioned the courts to post a higher bond to cover his role as trustee. Mr. O’Brien had posted a $1,000 bond using his own underwriter and paying for it with his own money. In March 2010, the citizens won their petition when Mr. O’Brien agreed to a $25,000 bond — far above the standard $10,000 bond that the other trustees hold.
“Given the allegations in this very comprehensive report, it’s even more imperative than ever that trustee O’Brien resign,” said Courtney A. Laginess, an attorney who represented the Anderson Township citizens over the higher bond coverage. “It should raise the public’s suspicion.”
Meanwhile, Mr. O’Brien has 30 calendar days to respond to the notice, said Dennis Ginty, a spokesman for the Ohio Department of Commerce. Dennis Concilla, an attorney with Carlile Patchen & Murphy LLP, who is representing Mr. O’Brien, said “we are working with the state of Ohio and we are confident that we will get a resolution.”