Updated August 2025 –San Antonio, Texas
According to publicly available records San Antonio-based brokerage firm McNally Financial Services (CRD#121196) , discloses five prior regulatory events.
FINRA Investigation of McNally Financial
McNally Financial makes the following disclosure on their 3/31/25 Annual Report filed with the United States Securities and Exchange Commission:
“The Company is currently subject to an ongoing investigation by the Financial Industry Regulatory Authority (FINRA), initiated on February 28, 2025 (Matter No. 20250846569), regarding the sale and supervision of structured products, including steepeners and reverse convertibles, from January 1, 2015, to December 31,2022. The inquiry focuses on customer suitability, training, and supervisory procedures.”
Texas State Securities Board Sanctions Mark Kemp and McNally Financial Services Corporation- October 2024
The Texas State Securities Board (TSSB) issued a Disciplinary Order in October 2024 following an investigation involving 12 customer claims alleging fraud in connection with unsuitable sales of reverse convertibles.
TSSB made the following findings:
- Reverse Convertibles are high-risk products appropriate only for sophisticated investors who are willing and able to endure total loss of investment.
- Reverse Convertibles have a complicated features that protect sophisticated bond issuers, usually large banks, at the expense of retail investors.
- Many of the Reverse Convertibles Kemp purchased for his clients were linked to volatile equities. Futu Holdings Limited, Zillow Group, Pinterest Inc. , Workhorse Group Advanced Micro Devices, Digital Turbine, Baidu.
- The majority of Kemp’s clients were elderly investors on the brink or at the beginning of retirement, tolling over their emplyee sponsored 401ks who were looking for a way to replace their loss of income to get through retirement.
- Kemp purchased Reverse Convertibles in certain client accounts and in quantities that exceeded the risk tolerances these clients were willing to endure.
- Kemp had no reasonable basis to believe that recommending reverse convertibles was in the best interest of his clients.
The TSSB suspended Kemp’s investment adviser representative registration for two weeks and reprimanded him. TSSB also ordered Kemp and McNally to refund certain clients.
The Financial Industry Regulatory Authority (FINRA) is the agency that licenses and regulates stockbrokers and brokerage firms. FINRA requires brokers and brokerage firms to report customer complaints and disputes as well as regulatory sanctions. In addition brokers are required to disclose certain financial matters such as personal bankruptcies, judgments and liens.
In 2/2022 Nevada securities regulators assessed McNally a fine of $50,000 to resolve allegations that the firm failed to establish and maintain a reasonable system to supervise a former sales representative. In addition the firm was ordered to pay restitution of $14,000 to a former customer.
In 7/2013 McNally Financial Services was censured and fined $15,000 to resolve FINRA allegations that the firm failed to establish and maintain an adequate supervisory system and written supervisory procedures governing its sale of Steepeners to it customers, thereby violating NASD Rule 3010 and FINRA Rule 2010. FINRA alleged that the sale of Steepeners was a significant part of McNally’s business during the relevant time period. FINRA AWC 2011025617101
STEEPENER INVESTMENTS
According to the FINRA allegations: ” Steepeners are complex, non-conventional products. They are typically longer-term notes and certificates of deposit with 10 to 20 year maturity dates. Steepeners pay interest rates that are fixed initially and float thereafter based on the “steepness” of the yield curve.’ The steeper the yield curve, or wider the spread between long- and short-term interest rates (typically, the benchmark rate is the constant maturity swap rate), the higher the interest rate paid. Conversely, the flatter the yield curve, or narrower the spread between long and short-term rates, the lower the interest rate paid. Steepeners are typically callable by the issuers after a relatively short, pre-specified period of time (e.g., one year).”
See FINRA’s Investor Alert regarding Steepeners issued in November 2011.
Depending on the terms of the particular Steepener investment, it may not be suitable for someone who is retired or who is seeking a conservative investment strategy.
McNally Financial Services has been a FINRA member since 2002. They have about 22 registered representatives in branch offices located in Texas, California, Florida and Nevada.
If you have questions about an account with McNally Financial Services, call to discuss your options.
Investigation of McNally Financial Broker Mark Kemp
Rex Securities Law , with offices in Boca Raton, FL, and Austin, TX, provides representation to investors nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.
Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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