Order requires firm to remove replacement letters from employee files

Attorney General Kathy Jennings’s Investor Protection Unit secured a penalty of $995,180 from an investment adviser firm for violations of the Delaware Securities Act, including filing incomplete and inaccurate registration materials, failing to supervise employees, and failing to maintain records and documents that should have been preserved.

The Investor Protection Unit (the “Unit”), the arm of the Delaware Department of Justice that regulates the registration and conduct of securities firms and professionals in the state, reached an agreement settling an investigation into Kovack Advisors, Inc. (“Kovack”) on November 21, 2025.

“My office is charged with regulating investment advisors to help ensure investors in Delaware are protected,” said AG Jennings. “Investors put a lot of trust in their investment professionals and the firms they work for, and it is important that the trust is deserved. The firms may not mislead the very regulators tasked with monitoring them.”

In the consent order, the Investor Protection Director found that Kovack filed multiple inaccurate registration forms that failed to disclose a prior investigation into the conduct of one of its representatives. The Director further found that Kovack provided inaccurate information in response to inquiries made in connection with the investigation, and that the Firm failed to preserve documents. The Director also found that when the Unit asked Kovack about certain pre-employment letters that the Firm had inaccurately represented that it had sent and maintained, as required by law, Kovack created dozens of pre-employment letters, inaccurately labeled each as a “2nd Request,” and placed them in its personnel files.

In settling the investigation, Kovack consented to the entry of the Director’s findings without admitting or denying the charges. Along with paying the penalty, Kovack has agreed to remove the pre-employment letters from its files. To view the full consent order, visit attorneygeneral.delaware.gov/fraud/orders/.

To check the registration status of your financial professional, please visit brokercheck.finra.org. If you believe you have been misled by your financial professional or firm, please file a complaint with the Investor Protection Unit, available at: attorneygeneral.delaware.gov/fraud/ipu/ipu-complaint-form/.

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