Pennsylvania Advisors Kevin Kane and Sean Kane Charged with Fraud by the SEC

MDF Law announces recovery options for victims of Pennsylvania based financial advisors Kevin Kane[1] and Sean Kane[2].  The father and son team had recently been associated with both Waddell & Reed and Cambridge Investment Research broker-dealers.  On March 1, 2023 the Kanes were named as a defendant by the United States Securities and Exchange Commission (SEC) in a case that was filed in the United States District Court for the Middle District of Pennsylvania (Index No. 1:23-cv-00371).  The complaint alleges that the advisors hid their termination from clients.  If you or someone you know lost money with your investments through the Kevin Cane or Sean Kane, please contact attorneys Marc Fitapelli or Jeffrey Saxon at 800-767-8040 to evaluate your financial recovery options.

Fraud Charges Against Kevin Kane and Sean Kane Explained

The father and son team were terminated by Waddell & Reed in February 2021 for multiple violations of the both firm’s policies and procedures and industry-wide rules and regulations.  They had been employed by Waddell & Reed from October 2018 to February 2021, managing $27 million in assets for approximately 100 clients.  The alleged transgressions included undisclosed outside business activities in violation of FINRA rules, sharing client information with a third party, failing to comply with required monitoring of communications, and various other failures to protect clients’ confidential information and data.

Association with Cambridge Investment Research

After the termination in 2021, the duo sought association with another investment advisory firm.  They were hired by Cambridge Investment Research on March 24, 2021.  The SEC alleged that the Kanes breached their fiduciary duties with multiple false statements to clients in an effort to prevent clients from discovering the truth regarding their termination.  These actions included (1) falsely telling clients that they were voluntarily ending their association with Waddell & Reed, (2) falsely telling clients that they were still associated with Waddell & Reed, (3) failing to alert clients of their termination, and (4) impersonating their clients in telephone calls with Waddell & Reed to complete securities transactions.  This included a significant number of phone calls and texts in which they reassured clients that nothing had changed and they were still working at Waddell & Reed or chose to leave the firm due to a merger with another company.

SEC v. Kevin Kane – March 1, 2023 Complaint

Recovery Options for Investors

Under the rules of the SEC and FINRA[4], broker-dealer firms have a duty to reasonably supervise its registered representatives.  This includes monitoring of all outside business activities of its registered representatives.  Based on its investigation, MDF Law believes that Waddell & Reed may have been negligent in its supervision of Kevin Cane and Sean Cane as well as their outside business based on the facts presented in the SEC’s complaint.  Additionally, Cambridge Investment Research may have been negligent in its hiring of the investment duo based on their termination just a month prior for violation of industry regulations.  Such negligence can make a firm liable to its customers for losses sustained from the improper activities of its employees.

FINRA Arbitration Cases

Customers of Kevin and Sean Kane may be able to file arbitration cases against Waddell & Reed or Cambridge Investment Research to recover their losses.  Due to language in customer agreements, such lawsuits are not filed in court, but in an arbitration forum with FINRA. FINRA stands for the “Financial Industry Regulatory Authority.”   Most FINRA arbitrations are resolved in approximately 1-2 years.  Former customers may be able to sue for their lost principal, interest and attorney’s fees, but an attorney must make that determination after discussing the specifics of the case.

Did You Lose Money Investing?

If you or someone you know lost money investing with Kevin Kane or Sean Kane, please contact attorneys Marc Fitapelli or Jeffrey Saxon for a free and confidential consultation at 800-767-8040.