The Financial Industry Regulatory Authority (FINRA) fined Percival Financial Partners Ltd. and Kenneth P. Taylor Sr. for regulatory violations including insufficient net capital maintenance, conducting business while suspended, filing inaccurate financial reports, and maintaining incorrect books and records.
The violations occurred on multiple dates including November 1, 2021, April 1, 2022, and April 9, 2023. Kenneth P. Taylor Sr., who served as CEO and CFO among other roles, attempted to address the capital shortfall with a personal loan, but this proved insufficient.
Percival generated approximately $100,000 in revenue during periods of capital deficiency and approximately $900,000 after FINRA suspended the firm on April 10, 2023. Taylor withdrew $130,000 from the firm during this period.
The firm also submitted financial audit reports that contained inaccuracies, including mischaracterization of liabilities.
As a result, Percival Financial Partners Ltd. and Kenneth P. Taylor Sr. consented to FINRA’s disciplinary action, which included a censure and financial penalties totaling $165,000 – $150,000 for Percival and $15,000 for Taylor. Additionally, Taylor received a two-year suspension from holding principal positions.
Key Points
Table of Contents
- FINRA sanctioned Percival Financial Partners and Kenneth P. Taylor Sr. for multiple regulatory violations, including insufficient net capital maintenance and conducting business while suspended, resulting in financial penalties totaling $165,000.
- The firm reported net capital deficiencies beginning November 1, 2021, which increased over time to exceed $900,000 by April 9, 2023, indicating significant financial compliance issues.
- Despite being suspended by FINRA on April 10, 2023, the firm continued generating revenue through securities business and transition management services.
- Percival Financial Partners submitted financial reports and maintained books and records that contained inaccuracies between November 1, 2021, and January 31, 2025.
- As part of the settlement with FINRA, Kenneth P. Taylor Sr. must requalify by examination after serving a two-year suspension to regain his professional standing in the industry.
Detailed Analysis of FINRA’s Actions Against Percival Financial Partners
Violations Cited
FINRA cited Percival Financial Partners Ltd. and Kenneth P. Taylor Sr. for several regulatory violations. The firm failed to maintain adequate net capital as required by financial regulations.
Financial firms are required to maintain sufficient capital to ensure operational stability and investor protection. Additionally, the firm conducted business activities during a period of regulatory suspension.
The financial reports submitted by the firm contained inaccuracies that could potentially mislead stakeholders about the company’s financial condition. Furthermore, their books and records contained errors, creating confusion regarding their financial status.
These actions were determined to be in violation of the standards established by the Financial Industry Regulatory Authority (FINRA).
Net Capital Maintenance
Percival Financial Partners experienced significant net capital compliance issues. As of November 1, 2021, the firm reported a deficiency of $79,000 below required levels. This shortfall increased by April 1, 2022, exceeding $76,000.
Between April 1, 2022, and April 9, 2023, their capital deficit grew to over $900,000. These financial issues represent a failure to meet regulatory capital requirements.
Maintaining adequate net capital is a fundamental requirement for investment firms, designed to ensure they can withstand market fluctuations and protect investor interests. Percival’s capital deficiencies raised significant regulatory concerns about their operations and financial stability.
Conducting Business While Suspended
FINRA suspended Percival Financial Partners on April 10, 2023. Despite this suspension, the firm continued to conduct securities business, generating over $100,000 in revenue during this period.
This continuation of business activities during a suspension period raised regulatory compliance concerns.
During the suspension, their transition management business generated more than $900,000 in additional revenue. This situation highlighted issues with regulatory compliance within the firm’s operations.
Such activities have implications for market integrity and regulatory enforcement.
Inaccurate Financial Reports
Percival Financial Partners submitted financial reports that contained material inaccuracies, leading FINRA to reject them. These reports mischaracterized certain liabilities and omitted required disclosures.
These reporting issues resulted in heightened regulatory scrutiny.
Kenneth P. Taylor Sr. was involved in the submission of these reports. The inaccurate submissions resulted in multiple deficient audit reports, further indicating financial reporting issues within the firm.
These circumstances raise questions about the accuracy and transparency of the firm’s financial reporting practices.
Inaccurate Books and Records
Percival Financial Partners maintained books and records that contained inaccuracies. From November 1, 2021, to January 31, 2025, the firm submitted FOCUS reports that contained errors. These inaccuracies affected the representation of the firm’s financial condition.
Kenneth P. Taylor Sr. recorded capital withdrawals as loans rather than equity withdrawals. This mischaracterization created inconsistencies in the financial records.
These record-keeping discrepancies affected the transparency of the firm’s financial status. Accurate record-keeping is essential for maintaining transparency and regulatory compliance in the financial services industry.
Financial Deficiencies
Percival Financial Partners experienced increasing financial deficiencies over time. On November 1, 2021, the company reported a capital deficiency exceeding $79,000. By April 1, 2022, the shortfall had grown to more than $76,000.
The situation deteriorated further, and by April 9, 2023, the deficiency had increased to over $900,000.
These progressive capital shortfalls indicated significant financial management issues within the firm. The firm continued operations despite these capital deficiencies. The inaccurate financial reporting complicated the assessment of the firm’s true financial condition.
Timeline of Events
November 1, 2021
On November 1, 2021, Percival Financial Partners’ net capital fell approximately $79,000 below required levels. This capital deficiency was attributed to non-allowable assets and personal equity withdrawals made by Kenneth P. Taylor Sr.
These financial decisions affected the firm’s capital compliance position.
April 1, 2022
On April 1, 2022, Percival Financial Partners’ net capital deficiency exceeded $76,000. Withdrawals by Kenneth P. Taylor Sr. contributed to this capital shortfall.
Despite these financial challenges, the firm continued business operations without adequately addressing the capital deficiencies. During this period, the firm submitted deficient audit reports and maintained inaccurate financial records.
April 9, 2023
By April 9, 2023, Percival Financial Partners’ net capital deficiency had grown to over $900,000. This represented a significant deterioration in the firm’s capital position.
During this period, Kenneth P. Taylor Sr. continued to withdraw capital from the firm, with withdrawals totaling approximately $130,000. These actions occurred despite the firm’s ongoing financial compliance issues.
Kenneth P. Taylor Sr.’s Roles
Kenneth P. Taylor Sr. founded Percival Financial Partners and held multiple positions within the firm, including CEO, CCO, CFO, CTO, and AML Compliance Officer. His various roles gave him significant influence over the firm’s management and compliance practices.
Taylor also served as an Introducing Broker-Dealer Financial and Operations Principal and Executive Representative. These positions required knowledge of financial regulations and operational oversight.
His multiple roles placed him in a position of responsibility for decisions affecting the firm’s regulatory compliance during the period in question.
Attempts to Address Capital Shortfall
Kenneth P. Taylor Sr. attempted to address the capital shortfall by obtaining a $100,000 personal loan from a customer. This approach did not resolve the capital deficiency and instead increased the firm’s liabilities.
Despite this attempt, the firm continued to experience net capital deficiencies.
The firm continued business operations while these capital issues remained unresolved. The ongoing submission of deficient audit reports and maintenance of inaccurate books and records complicated the firm’s financial situation.
Continued Regulatory Issues
Continued Business Operations Despite Capital Deficiency
Percival Financial Partners continued operating despite awareness of capital deficiencies. During this period, the firm earned approximately $300,000 in securities commissions and $60,000 from transition management.
Despite recognition of their financial compliance issues, the firm continued capital withdrawals and revenue generation. These actions occurred while the firm was not in compliance with capital requirements.
Capital Withdrawals and Revenue Generation
Taylor withdrew $130,000 from Percival Financial Partners during the period of capital deficiency. Despite these withdrawals, the firm generated over $100,000 in revenue while experiencing capital compliance issues.
These simultaneous withdrawals and revenue generation occurred during a period when the firm was not meeting regulatory capital requirements.
Suspension and Continued Business Operations
FINRA suspended Percival Financial Partners on April 10, 2023. Despite this suspension, the firm continued to operate its transition management business, generating over $900,000 in revenue during this period.
This continuation of business activities during a regulatory suspension raised compliance concerns.
Submission of Deficient Audit Reports
Percival Financial Partners submitted multiple audit reports that contained deficiencies. Kenneth P. Taylor Sr. was involved in the submission of these reports, which FINRA subsequently rejected.
The reports contained inaccuracies, including mischaracterization of liabilities and omission of required financial disclosures.
Inaccurate FOCUS Reports and Financial Records
From November 1, 2021, to January 31, 2025, Percival Financial Partners submitted FOCUS reports that contained inaccuracies. The firm recorded capital withdrawals as loans, which misrepresented the nature of these transactions.
The firm’s books and records contained additional errors, such as recording a $100,000 transfer incorrectly. These inaccuracies affected the transparency of the firm’s financial records.
Resolution and Agreements
Percival’s Agreement with FINRA
Percival Financial Partners accepted responsibility for the violations. The firm consented to a censure from FINRA and agreed to pay a financial penalty of $150,000.
This agreement followed FINRA’s findings regarding multiple regulatory violations related to the firm’s business practices.
Kenneth P. Taylor Sr.’s Agreement with FINRA
Kenneth P. Taylor Sr. reached a separate agreement with FINRA. He accepted a two-year suspension from holding any principal position within the financial services industry.
To regain his professional standing, Taylor must requalify by passing an examination after serving the suspension period. Additionally, he agreed to pay a fine of $15,000 as part of the settlement.
Conclusion
The case of Percival Financial Partners and Kenneth P. Taylor Sr. highlights the importance of regulatory compliance in the financial services industry. The firm’s failure to maintain required net capital and its decision to conduct business while suspended resulted in significant regulatory consequences.
The importance of accurate financial reporting and proper record-keeping is emphasized by this case. Financial firms must maintain transparency and compliance with regulatory requirements to maintain the integrity of the financial markets and protect investor interests.
