The SEC has barred a Pennsylvania advisor who, along with his father, was sued by the agency for allegedly lying about his termination and impersonating clients to make transactions in their accounts.
Sean Michael Kane, 37, of Philadelphia, consented to the sanction without admitting to or denying the SEC’s findings of fraud, the Securties and Exchange Commission said. A settlement has not yet been issued for his father, Kevin Kane, 67.
Sean Kane and his father, an advisory team at Waddell & Reed, were fired in February 2021 “for violation of multiple firm policies including outside business activities, communications with the public, client/data privacy and client signatures,” according to their BrokerCheck records. Kane began working at the firm in October 2018, joining his father, who had been there five years. They managed more than $27 million in assets for more than 100 clients, the SEC said.
The Kanes were not registered with an investment firm between February 23, 2021, and about March 24, 2021, but continued to act as if they were still associated with Waddell & Reed by providing investment advisory services to their former clients, according to the SEC complaint.
Around the time of the termination, Waddell & Reed had been finalizing the sale of its brokerage business to LPL Financial. The Kanes, the complaint noted, used the information about that deal to solicit clients to join them at the new firm, even though they had been terminated, the SEC complaint said.
The SEC said the Kanes, among other lies, told clients that they were voluntarily leaving the firm because of the acquisition and that they could continue to conduct transactions in their accounts. To prevent clients from discovering the truth, the complaint said, they impersonated their clients in telephone calls with Waddell & Reed.
In one instance, the complaint said, when a client requested information about a disbursement from Sean Kane, he failed to disclose that he was fired and could no longer access the account. He instead used the client’s personal information on a telephone call with the firm to obtain the requested information. “Sean Kane attempted to disguise his identity ... by entering *67 before he called the firm. Entering *67 before making a call allows a user to block their Caller ID name and number,” the complaint said.
Waddell & Reed became suspicious of the possible impersonation of clients by the Kanes and began an investigation on March 18, 2021, and a few days later sent the duo cease-and-desist letters and demanded the return of confidential client information, the SEC said.
“As investment advisers, the Kanes owed each of their advisory clients a fiduciary duty to act in the client’s best interest, to exercise the utmost good faith in dealing with clients, to disclose all material facts to their clients, and to employ reasonable care to avoid misleading those clients,” the SEC said.
The Kanes began working at Cambridge Investment Research on March 25, 2021. They were fired in March 2023, when Cambridge learned of the SEC filed its complaint against them, according to BrokerCheck.
Sean Kane entered the industry in 2010 with Lincoln Financial Distributors and worked briefly for a few other firms including Prudential Investment Management Services, Cohen & Steers Securities and Resource Securities before joining Waddell & Reed in 2018.
The Kanes could not be reached for comment.