No current employment or registration information is available. He has been in the business since 2004. Padilla is the subject of 49 disclosures dating back to 2006, 47 of which are customer disputes.
Puerto Rico Securities Arbitration Claims
In a routine examination of Nationwide Planning Associates, Padilla was found to have recommended an investment called inverse exchange traded funds, or NT-ETFs, to his retail customers between March 2020 and October 2020. However, Padilla did not have a complete understanding of NT-ETFs to know whether they were suitable for his retail customers. Regulation Best Interest requires brokers to fully understand their offerings before making recommendations to their clients. Therefore, Padilla violated Reg BI by not knowing the full story of NT-ETFs.
Nine of Padilla’s retail customers used his recommendations for NT-ETFs and held them from 14 to 65 days. These customers suffered collective losses of $26,000.
FINRA sanctioned Padilla for these actions, which included:
- A suspension of three-month suspension from associating with any FINRA member in all capacities
- A fine of $2,500
- Restitution of $26,422 plus interest (described in the AWC letter)
Padilla signed the Acceptance, Waiver & Consent (AWC) Letter, and was suspended from 4/3/2023 through 7/2/2023.
Jose Candelario And Exchange Traded Funds
An ETF, or exchange traded fund, is an investment bought and sold like stocks. Investors can gain exposure to a wider range of asset classes that they might not otherwise have available, such as bonds, commodities, currencies, or real estate. Like any investment, they are not without risk.
The inverse ETF sold by Padilla was a particularly risky one as it involves the use of derivatives to bet on a market decline. When the market declines, the inverse ETF increases by the same percentage, minus the commissions and fees for the broker.
Liquidity is the biggest risk in an ETF, and they are not intended to be held long-term. The NT-ETF rebalances its portfolio every day (also called a “reset.”) They are considered unsuitable for retail investors who plan to hold them for more than one trading session, particularly if the market is volatile.
Because the ETFs reset every day, Padilla’s customers suffered losses by holding them longer than they should have.
Additional Disclosures
Padilla’s termination in 2006 is his first disclosure. His departure from R-G Investments included allegations of “unsuitability, omission of material information, unauthorized trading.” He rebutted the allegations with a statement that he had already signed a contract with his next employer Ramirez when R-G Investments terminated his employment.
The most recent customer disputes are dated from 12/21/2022 through 10/23/2023 with total requested damages of $13,523,001. The allegations in these disputes against Padilla include:
- Breach of fiduciary duty
- Breach of contract
- Contractual negligence
- Fraud and constructive fraud,
- Failure to supervise and control
- Violation of Section 10(b) of the Exchange Act
- Violation of FINRA Rule 2090 and 3110
- Violation of the Investment Advisers Act of 1940
- Violation of the Puerto Rico Uniform Securities Act and Civil Code
- Negligence and gross negligence
- Unsuitable investment recommendations
- Misrepresentations and omissions
- Unsuitable investment recommendations
- Failure to act in the best interest of the customers
- Mismanagement of account
- Unauthorized trading
Multiple customer disputes between 8/4/2014 and 1/24/2020 have mostly been settled with Padilla indicating that he was not a respondent in most of the cases as most cases are only brought against the broker-dealer.
Silver Law Group represented many investors in Puerto Rico relating to the collapse of Puerto Rico bonds. As many of these cases utilize arbitrators from south Florida, we are familiar with many of the arbitrators and the process for representing investors in Puerto Rico and elsewhere.
Did You Invest With Jose Manuel Candelario Padilla?
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.