Mark Kemp: McNally Advisor Sanctioned over Reverse Convertibles

A recent sanction against Corpus Christi, Texas financial advisor Mark Kemp (CRD# 2057200) alleged that he engaged in inequitable sales practices when selling reverse convertible notes to elderly investors. Financial Industry Regulatory Authority records show that he is registered as a broker and an investment advisor with McNally Financial Services, doing business as Kemp Financial Services.

Mr. Kemp’s BrokerCheck report discloses the Texas State Securities Board’s recent sanction against him. Filed in October 2024, it alleged that as a McNally Financial representative, he purchased reverse convertible notes in the accounts of clients “in quantities that exceeded the risk tolerances [they] were willing to endure.” According to the sanction, he recommended these “high-risk, complex” investments with no reasonable basis to  believe they were suitable for his clients, many of whom were “elderly investors on the brink or at the beginning of retirement.” The Board concluded that his recommendations constituted “an equitable practice in the sale of securities.” It suspended him for two weeks and ordered him and the firm to refund certain clients.

Another disclosure on Mr. Kemp’s BrokerCheck report concerns an investor complaint against him. Filed in July 2024, it alleges that as a representative of McNally Financial Services, he recommended unsuitable investments. The pending complaint alleges damages of $209,816.

A second investor complaint, filed in 2023, alleged that he over-concentrated investments in the customers’ accounts, recommended unsuitable investments, and misrepresented “high-risk and unconventional investments.” The pending complaint alleges damages of $150,000.

A third investor complaint, filed in 2022, alleged that he recommended unsuitable reverse convertible securities. In 2023 the complaint reached a settlement of $22,500.

A fourth investor complaint, filed in 2021, alleged that he violated principles of trade and fair dealing, committed fraud, negligently misrepresented material facts, breached his fiduciary duty, and violated state and federal securities law. In 2023 the complaint reached a settlement of $270,000.

In a statement included with the 2021 complaint’s disclosure, Mr. Kemp commented on the settlement. “The limited partnership forming the basis of the claim had been bought out, but the proceeds have not been distributed to the shareholders as of yet,” he wrote. “The claim was resolved by the repurchase of interest in the limited partnership, which formed the basis of the claim. $85,000 in attorney’s fees for the claimant was paid by the firm’s insurance carrier and not the representative.”

According to the Financial Industry Regulatory Authority, Mark Kemp holds 33 years of securities industry experience. Based in Corpus Christi, Texas, he has been a representative of McNally Financial Services since 2021, doing business as Kemp Financial Services. His past registrations include NEXT Financial Group, Hornor Townsend & Kent, MONY Securities Corporation, and the Mutual Life Insurance Company of New York. (Information current as of December 13, 2024.)

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