Stephen Kwan Faces 90-Day Suspension in Texas

Stephen Kwan (CRD #: 3183681), a broker formerly registered with Madison Avenue Securities, has had his registration suspended in Texas, according to his BrokerCheck record, accessed on January 12, 2023. If you want to know more about his alleged conduct as a broker, read on.

Suspension by State of Texas

On November 2, 2022, the State of Texas initiated regulatory action against Stephen Kwan. The state alleged that Madison Avenue Securities made Stephen Kwan aware of certain allegations made against GPB Automotive Portfolio, LP as well as that the firm was suspending sales of GPB, and provided him with the opportunity to cancel six pending sales.

The State of Texas alleged that Stephen Kwan maintained the suitability of his recommendations of these sales despite not having a reasonable basis to do so after the firm suspended their selling agreement. The State of Texas alleged that Stephen Kwan’s recommendations violated Section 4007.105(a)(3)(A) of the Texas Securities Act.

The Texas Securities Act

Section 4007.105(a)(3)(A) of the Texas Securities Act allows the Texas Securities Commissioner to deny, suspend, or revoke the registration of brokers and investment adviser representatives if they have engaged in inequitable practices with regard to the sale of securities or investment adviser services.

Sanctions

Stephen Kwan was suspended in all capacities in the State of Texas starting November 2, 2022. His suspension will end on January 30, 2023.

Blue Sky Laws

Blue sky laws like the Texas Securities Act are state-level regulations that provide an additional layer of fraud protection for investors.

Investor Disputes

On November 19, 2021, multiple investors filed a dispute alleging that Stephen Kwan made unsuitable recommendations to invest in GPB. This dispute is currently pending.

In a dispute filed on March 26, 2021, investors named Stephen Kwan in allegations of failure to supervise and unsuitable recommendations of alternative investments, starting in 2011. This dispute was settled for $50,000.

On February 18, 2020, multiple investors alleged that Stephen Kwan committed the following violations of FINRA rules and Texas state regulations with regard to the sale of GPB investments:

• Failure to conduct due diligence
• Unsuitable investment recommendations
• Overconcentration of client accounts
• Misrepresentations and omissions

The clients sought $100,000 in damages and received a settlement of $65,003.71.

FINRA Rule 2111 

FINRA Rule 2111 defines suitable investments as securities that fit an investor’s profile, which describes an investor’s age, tax status, investment goals, and other characteristics.

FINRA Rule 3110

FINRA Rule 3110 requires that firms establish systems of supervision to ensure their compliance with securities regulations. Among other things, firms must appoint supervisory personnel and provide them with Written Supervisory Procedures (WSPs) to follow.

FINRA Rule 2020

FINRA Rule 2020 bans the use of fraudulent tactics, like deception or manipulation, as they relate to the purchase and sale of securities. This includes the misrepresentation or omission of information related to investments.

Background Information

Stephen Kwan has passed the following exams:

• Series 65 – Uniform Investment Adviser Law Examination
• Series 63 – Uniform Securities Agent State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination
• Series 6 – Investment Company Products/Variable Contracts Representative Examination

He previously worked for Madison Avenue Securities (CRD#:23224) and NYLIFE Securities (CRD#:5167).

Kurta Law Can Help

If you worked with Stephen Kwan and you have concerns about your investments, contact a New York investment fraud lawyer today for a free case evaluation. Call (877) 600-0098 or email info@kurtalawfirm.com.   

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 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.