SEC Suspends Kenneth Friedrich for Alleged Failure to Supervise
Kenneth Friedrich (CRD #:1447332), a broker formerly registered with Hilltop Securities, has been suspended by the SEC for allegedly failing to supervise according to his BrokerCheck Record accessed on November 24, 2021.
SEC Allegations
The SEC order was initiated on September 17, 2021, regarding Kenneth Friedrich’s alleged misconduct in connection with RBC Capital Markets, LLC’s (“RBC”) purchase and sale of certain new issue municipal bonds from and to unregistered brokers known as “flippers.”
According to the SEC’s order, over a nearly four-year period, RBC improperly allocated bonds intended for institutional customers and dealers to flippers, who then resold or “flipped” the bonds to other broker-dealers at a profit.
During this period, Kenneth Friedrich, who served as head of RBCs Municipal Sales, Trading, and Syndication group, allegedly permitted RBC traders to place orders for new issue bonds with flippers. The syndicate desk allegedly allocated some bonds to two flippers ahead and instead of retail customers, even though the flippers did not meet the issuer’s retail eligibility.
Between January 2014 and December 2017, RBC allegedly used flippers to circumvent issuer priority instructions and receive higher priority for its dealer orders — in some instances, when RBC was not a participating underwriter in the offering.
According to the SEC, Kenneth Friedrich violated Section 15B(c)(1) of the Exchange Act, and Municipal Securities Rulemaking Board (“MSRB”) Rules G-11(k) and G-17. He also violated MSRB Rule G-27 and failed reasonably to supervise within the meaning of Section 15(b)(4)(E) of the Exchange Act to prevent and detect violations of MSRB Rules G-11(k) and G-17 by a certain registered representative.
SEC Sanctions
Kenneth Friedrich consented to the following SEC sanctions:
- Six-month cease-and-desist order from buying or selling negotiated new issue municipal securities on behalf of any broker, dealer, investment adviser, or municipal securities dealers.
- Six-month suspension from acting in a supervisory capacity with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization
- A civil money penalty of $30,000
Background Information
Kenneth Friedrich has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 55 – Limited Representative-Equity Trader Exam
- Series 7 – General Securities Representative Examination
- Series 10 – General Securities Sales Supervisor – General Module Examination
- Series 9 – General Securities Sales Supervisor – Options Module Examination
- Series 53 – Municipal Securities Principal Examination
- Series 24 – General Securities Principal Examination
Kenneth Friedrich has also worked with the following firms:
- Hilltop Securities (CRD #: 6220)
- RBC Capital Markets (CRD #: 31194)
- Artemis Capital Group (CRD#:7819)
- R. W. Corby & Co. (CRD#:7165)
Kurta Law Can Help
If you have been victimized by Kenneth Friedrich as a broker, don’t hesitate to contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.
For nearly 20 years, Kurta Law has advocated for investors to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and 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.