An AWC was issued in which Kimm was fined $5,000 and suspended from association with any FINRA member firm in all capacities for six months. In light of Kimm’s financial status, a lower fine was imposed. Without admitting or denying the findings, Kimm consented to the sanctions and to the entry of findings that he recommended over 100 unsuitable short-term trades of long-term investment products and eight unsuitable mutual fund switches in a customer’s account. The findings stated that on numerous occasions, Kimm recommended that the customer sell municipal bonds shortly after buying them. All of the municipal bonds in question were income-producing products intended for customers with long-term investment time horizons, and carried substantial commissions. In addition, on numerous occasions, Kimm engaged in unsuitable short-term trading in the customer’s account with respect to closed-end funds and mutual funds. Of the trades at issue, many were income-producing closed-end municipal bond funds intended for customers with long-term investment time horizons. Other trades involved Class A mutual fund shares which are intended to be held long-term because they are front-loaded. Despite the long-term attributes of municipal bonds, closed-end funds and Class A mutual fund shares, Kimm recommended the purchase and subsequent sale of these products within a year of purchase. Nearly all of the short-term trades at issue involved holding periods of 90 days or less.
Kimm had no reasonable basis to believe that such short-term trading was suitable for any customer, particularly in light of the nature of the recommended transactions, the short holding periods and the transaction costs incurred. Kimm’s unsuitable trading also involved switching, where Kimm used the proceeds from the sale of Class A mutual fund shares to purchase other Class A mutual funds shares. Specifically, on at least eight occasions, Kimm recommended the sale of a mutual fund to purchase another mutual fund with identical or fundamentally similar investment objectives and underlying assets. As a result of Kimm’s unsuitable trading, the customer’s account incurred realized losses of approximately $200,000. The findings also stated that Kimm effected dozens of discretionary transactions, including municipal securities transactions, in the customer’s account without prior written authorization from the customer and without having the account approved as discretionary by his member firm. The suspension is in effect from January 16, 2018, through July 15, 2018. (FINRA Case #2014041587201)