FINRA Accuses Former National Securities Rep and Assistant of Converting Customer Funds
The Financial Industry Regulatory Authority has filed a complaint against former National Securities Corporation registered representative Kyle Harrington and his assistant Linda Milberger for converting customer funds and engaging in several undisclosed private securities transactions that he allegedly attempted to conceal with the help of his assistant.
In August 2012, Harrington allegedly converted approximately $20,000 from one of his clients, convincing her to authorize a wire transfer for a purported investment. Instead of investing the funds, the money was wired to Harrington’s business checking account without her knowledge and used it to pay his own business expenses.
FINRA said that when difficulties arose with the wire transfer, Harrington’s assistant, Milberger, altered the wire request form on at least two occasions in order to transfer all available cash out the client’s account to Harrington.
Harrington is also accused of engaging in a series of private securities transactions with at least two individuals who he sold more than 300,000 shares of Islet Sciences restricted stock for approximately $276,000.
FINRA says that Harrington actively attempted to conceal the transactions by submitting falsified records to his firm that mischaracterized the payments he had received for the stock sale as vacation rental payments. He allegedly created two falsified vacation rental-by-owner agreements for a property he owned in La Jolla California to justify the Islet stock payment, and his assistant is accused of altering bank statements requested by FINRA to conceal the originator of a stock payment.
In addition, after FINRA uncovered Harrington’s alleged $20,000 conversion of customer funds, he contacted the client and asked her to falsely state that she had stayed at his rental property in 2012, as an explanation for the transfer of the approximately $20,000 he converted. She refused.
In a comment on his BrokerCheck profile, Harrington said that he intends to “vigorously defend [himself] against any charges or claims brought by FINRA pursuant to this matter.”
FINRA claims that Harrington violated FINRA Rules 3040, 8210 and 2010, while Milberger allegedly violated FINRA Rules 8210, 4511 and 2010.
Harrington, who is currently registered with Aurora Capital, has been registered as a general securities representative since 1993, a general securities principal since 2009, and maintains a registered investment advisor, Harrington Capital Management. Millberger has been working with Harrington as a sales assistant since September 2010 and is currently associated with Aurora Capital.