Cheryl Kitashima, a broker currently registered with Centaurus Financial, has recently been implicated in an investor dispute as documented on her BrokerCheck record. This ongoing case serves as a colossal warning sign to investors trusting brokers with their financial dreams.
The allegations emerged on November 27, 2023, when an investor made accusations against Kitashima, stating she recommended that they take on an investment that proved unsuitable for their financial goals. This investment was not only high-risk, but was also speculative and illiquid. This has sparked a breach of fiduciary duty dispute with the investor seeking a settlement of upwards of $50,000.
The Concerning Pattern
Upon further investigation, this is not Kitashima’s first brush with investor disputes. On her record, four other settled disputes allege similar improprieties, pointing at unsuitable investment recommendations. These settled disputes collectively have reached a cost of approximately $300,000.
This raises alarming questions about the broker’s adherence to the Financial Industry Regulatory Authority’s (FINRA’s) Rule 2111, which stipulates that ever broker must ensure that the investment they recommend aligns with the investor’s financial goals. The alleged breaches indicate a significant disregard for this rule.
Main Violations of FINRA Rule 2111
Violations of this rule often present themselves in the form of excessive trading, sometimes known as “churning” where the numbers of trades don’t align with an investor’s goals. Other cases might involve the recommendation of unsuitable investment strategies, such as the overconcentration of securities in a specific stock or sector, leading to an increased degree of risk. The final common violation is the recommendation of high-risk or illiquid investments, which can result in substantial fees for the investor.
Breach of Fiduciary Duties
Brokers often exist in a dual state, acting as Registered Investment Advisers (RIAs) with the SEC. In such capacity, they are considered fiduciaries – mandated to act in their clients’ best interests. While they are not recognized as fiduciaries in their regular role, they must adhere to FINRA Rule 2111 and follow Regulation Best Interest.
Despite these guidelines and regulations, investors who have suffered losses due to such violations can consider seeking recourse through FINRA arbitration.
A Glimpse at Cheryl Kitashima’s Background
Kitashima is a seasoned professional with 42 years of experience in the industry, having cleared several professional exams including the Series 63 Uniform Securities Agent State Law Examination, SIE – Securities Industry Essentials Examination, Series 7 General Securities Representative Examination, Series 22 Direct Participation Programs Representative Examination, and Series 6 Investment Company Products/Variable Contracts Representative Examination. She stands registered as a broker with eight states and an investment adviser in six states.
Over her career, Kitashima has registered with seven firms, including Centaurus Financial, KMS Financial Services, Pacific Harbor Securities, Royal Alliance Associates, Integrated Resources Equity Corporation, FSC Securities Corporation, and Waddell & Reed.
If you’re an investor and have worked with Cheryl Kitashima and are concerned about your current investments, it’s crucial to take immediate steps for assessing your options. The guidance of a legal representative specialized in financial disputes could be highly advantageous when assessing the situation and deciding on the next steps. Securities fraud is an unfortunate reality, but by acting swiftly and decisively, affected investors can curtail their losses and pursue paths to recovery.