Kyle William Chapman (CRD #6303483, Las Vegas, Nevada)

Kyle William Chapman (CRD #6303483, Las Vegas, Nevada)

September 5, 2024 – An AWC was issued in which Chapman was assessed a deferred fine of $5,000, suspended from association with any FINRA member in all capacities for three months, and ordered to pay deferred disgorgement of commissions received in the amount of $1,471, plus interest. The customer brought and settled an arbitration against Chapman’s member firm, which Chapman was not a party to and did not participate in. Without admitting or denying the findings, Chapman consented to the sanctions and to the entry of findings that he willfully violated Reg BI by making a recommendation that was not in the customer’s best interest and that was not suitable in light of the customer’s investment profile. The findings stated that Chapman recommended that the customer invest a total of $50,000 in corporate bonds, a speculative, unrated debt security offered by a publicly-traded financial services company, after the customer reached out to Chapman about investing in the bonds. Chapman failed to perform reasonable diligence on the bonds before recommending it to the customer, and he failed to understand the risks related to the bonds. Chapman did not conduct a reasonable review of the offering documents, and thus did not understand that the bonds were high risk and speculative, or that, in the event of a default, bondholders’ ability to enforce their rights to payment was restricted. Further, at all relevant times, the customer’s investment objectives were income and preservation of capital and did not include speculation. Chapman earned $1,471 in commissions from these recommendations. The findings also stated that Chapman acted in contravention of Section 17(a)(2) of the Securities Act of 1933 (Securities Act) by making negligent misrepresentations and omissions of material fact when recommending the bonds to his customer. Chapman sent third-party risk reports to the customer that assigned a risk score of one, which represented the lowest risk, to the two-, three-, and five- year bonds, and the same risk score to cash. Before the customer made his second purchase of bonds, the customer emailed Chapman and asked, among other things, if the bonds were “still very conservative.” Chapman did not correct the customer’s belief that the bonds were a conservative investment. Instead, Chapman negligently misrepresented that: (1) the company was still acquiring life insurance policies, when it in fact had ceased doing so; (2) it was “normal” for a company like the company to operate at a loss for many years; (3) the company was “more secure” as a result of its merger with another company (which resulted in the company’s shift in business model toward providing liquidity to holders of illiquid investments and alternative assets); and (4) the customer should only “worry about” the five- or seven-year bonds. After receiving Chapman’s response, the customer invested his second investment in the bonds. The suspension is in effect from September 16, 2024, through December 15, 2024. (FINRA Case #2020068655901) If you have suffered losses as a result of Kyle William Chapman's act and/or actions, we would like to hear from you. We are currently investigating claims on behalf of clients who have suffered significant losses in their portfolios that are managed by Kyle William Chapman. The Schwartz Law Firm represents investors in claims against financial advisors and their firms. If you have questions about your potential claim or need assistance from an investment fraud lawyer, please contact us at 866-618-0545 or email Matthew Schwartz directly at mschwartz@tslfirm.com.