As the person responsible for supervising brokers at Joseph Stone Capital’s Manhattan branch office from August 2019 to June 2020, Graziano Was negligent in his supervisory capacity. Part of the responsibilities in the firm’s written supervisory procedures indicated that Graziano was required to review the branch’s daily trade blotter. When Graziano found anomalies, he was also required to speak with the broker as well as the broker’s client to ascertain if there were any violations to sales practices. Additionally, Graziano was required to enforce restrictions that another principal of the firm imposed on the broker limiting the commissions allowed to be charged in a customer account. Graziano failed to do any of these as required.
While examining the daily trade blotter for the Manhattan branch, Graziano did not identify red flags that showed the broker under his supervision was excessively trading in the account of a 78-year-old customer. This included numerous “in-and-out” trades of the same security. Even after instructed by the principal that the cost to equity ratio in this customer’s account exceeded the benchmarks for excessive training, Graziano still failed to investigate whether any sales practice violations had occurred by the broker.
Graziano failed to enforce the restrictions that the principal set on the commissions that the broker was allowed to charge in the customer’s account. In September of 2019, the principal notified Graziano that the brokers restrictions were going to be restricted in this customers account to 1% because the accounts cost-to-equity ratio had already exceeded 20%. But Graziano did not enforce the restriction as required. Between September 2019 and January of 2020, the broker charged this customer commissions greater than 1% on six separate occasions. These trades caused this customer to pay a total additional commission of $4,000, even after the principal issued a restriction for that account.
The result of Graziano’s failure to enforce the restrictions led to the broker’s continuation of the activity. From August of 2019 to June of 2020, the brokers recommendations to the customer resulted in a cost to equity ratio of 22% and led to the customer paying almost $120,000 in commissions and other trading costs.
FINRA then issued three sanctions against Anthony Graziano:
- A fine of $5,000
- A suspension of three months from association with any FINRA member in all principal capacities
- A requirement for Graziano to complete 20 hours of continuing education regarding supervisory responsibilities by a FINRA accepted provider. This training must be taken within 90 days of the notice of acceptance of the letter of Acceptance. Waiver and Consent (AWC.). Graziano must provide notification to FINRA’s Department Of Enforcement for the provider at least 10 days before the training, and when within 30 days after completion.
After he meets these requirements, Graziano’s suspension is slated to end on April 2nd, 2022.
In addition to his funeral suspension, Graziano has two entries of bankruptcy: one on January 30th, 2018, and one on December 7th, 2016. In both cases. Graziano withdrew his petition on the advice of his attorney. Because the petition was withdrawn prior to a judgement, he is seeking to have these entries removed from his Form U4D RP filings.
There are three customer disputes in Graziano CRD. The first one, on May 9th, 2008, was closed with no action. The second, filed on March 7th, 2008, was denied. The first one, filed on October 13th, 2005, was settled for $9,000. According to Graziano’s statement, the claim was “frivolous and unfounded, and it costs more to defend than to settle.”
Did You Invest With Anthony Graziano?
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