In a customer dispute filed on 11/29/2022, Silvestri’s “unsuitable recommendations in her fee-based account” opened in February of 2021 sustained losses. Silvestri wrote personal checks to cover some of the customer’s losses in the account. In the dispute, the customer requested damages of $9,500, and the firm settled the claim for $8,000.
On the same day, Level Four Financial terminated Silvestri’s employment, citing his failure to follow the firm’s policies on disclosure. The firm later amended his Uniform Termination Notice for Securities Industry Registration (Form U5) to reflect allegations that he’d borrowed money from a client while at Level Four Financial.
After leaving Level Four Financial, Silvestri moved to Aegis Capital in Dallas. Aegis was notified of the updates of Silvestri’s Form U5, and also received a phone call from a customer explaining the loan at both Level Four and at Aegis Capital. After an internal investigation, Aegis found that Silvestri had not only borrowed money from this client but did not notify the firm of the transaction or seek approval beforehand. Aegis reimbursed the client and terminated Silvestri’s employment on 7/19/2023.
FINRA began an investigation into Silvestri’s customer loan activities based on the Form U5 submissions from both Level Four Financial and Aegis Capital. FINRA contacted Silvestri on November 14, 2023 to request on-the-record testimony on November 29, 2023. Silvestri notified FINRA staff that he would not appear for on-the-record testimony at any time. This refusal is in violation of FINRA Rules 8210 and 2010.
FINRA then issued a Letter of Acceptance, Waiver & Consent (AWC) which Silvestri signed on 11/16/2023, which became finalized on 11/21/2023. In it, Silvestri agreed to the sanction of a permanent bar from all affiliation with FINRA broker-dealers in any capacity.
Why Can’t I Loan Money To My Broker?
While loans between friends and family members is common, your stockbroker is subject to rules against loans from customers except in very specific and limited circumstances. FINRA Rule 3240 prohibits a broker from borrowing from their customer unless they are a member of the broker’s immediate family, including:
- Parents
- Spouses
- In-laws
- Children
- Siblings
- Grandparents/Grandchildren
- Cousins
- Niece/nephew
- Anyone the stockbroker supports financially
In some cases, a person with whom the broker has a personal and/or business relationship outside of the one with the firm.
Most broker-dealers prohibit this type of loan and will only permit the transaction if the firm is notified in advance and gives its approval in writing. Otherwise, the firm could be held responsible for repayment if something goes wrong (and it occasionally does.) Any changes must also be submitted to the firm, such as repayment adjustments.
Did You Invest With Robert Silvestri?
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.