Kelly Johnston Embroiled in a $25 Million Mutual Fund Dispute

Kelly Johnston (CRD #: 5001042), a broker registered with Fidelity Brokerage Services in Covington, Kentucky is the subject of a $25 million investor dispute. This disclosure appears on her BrokerCheck record, accessed on November 2, 2023. Keep reading if you have questions about her alleged conduct as a broker. 

On August 21, 2023, an institutional customer, an SEC-registered public company, alleged that Kelly Johnston did not disclose that fixed-income mutual funds could lose principal. They further alleged that its investments in several fixed-income mutual funds were unsuitable because they were subject to potential principal loss. 

The institutional customer is seeking $25 million. 

FINRA Rule 2111 

FINRA Rule 2111 requires brokers to evaluate whether an investment fits their institutional investor’s financial goals.

Some common violations of this rule include:

• Recommendations of high-risk or illiquid investments. These investments may lead to high fees for the investor.
• Recommendations of unsuitable investment strategies. Investments that risk losing a principal investment are too high risk for many investors. 
• Excessive trading, which violates the need for quantitative suitability. This means that the number of trades must suit an investor’s goals. Excessive trading is also known as “churning.” 

Customers who rely on brokers for recommendations may be able to recover their losses by pursuing FINRA arbitration.

Background Information 

Kelly Johnston has passed the following exams:

• Series 66 Uniform Combined State Law Examination
• Series 63 Uniform Securities Agent State Law Examination 
• SIE – Securities Industry Essentials Examination 
• Series 7 General Securities Representative Examination 

She is a registered broker in all 50 states, the Virgin Islands, and Puerto Rico. She is a registered investment adviser in Kentucky and Texas. 

Kurta Law Can Help

If you worked with Kelly Johnston and have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm that exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.