La Scala engaged in short-term trading in a customer’s 401(k) retirement account between July 2014 and April 2016 and exercised de facto control over the account with discretionary authority. However, the trades La Scala made were not consistent with the investment objectives and resulted in $90,720 in trading costs and $116,194 in losses for the customer.
Additionally, La Scala did not have written authorization from the customer to exercise this discretion in the customer’s account. Aegis’ written policies from January 2015 and April 2016 prohibited representatives from acting on behalf of a customer without their express written authorization. Although he did occasionally discuss trading with the customer, he did not discuss individual trades with the customer on the days he made transactions.
In the Letter of Acceptance, Waiver & Consent (AWC), La Scala neither admitted nor denied the allegations. He agreed to a fine of $7,500 and a four-month suspension which ends on 6/21/2022.
In the broker’s comment, La Scala stated that he settled the claim on the advice of legal counsel, and that he had no prior disciplinary history with FINRA.
However, La Scala has four prior customer disputes: three from 2012 and one from 2010, with allegations of failure to supervise, mishandling of account, churning, excessive trading, and other related claims. All four were settled, although in the broker’s comment, La Scala claims in the 2012 cases that they were “meritless” and brought by the customer and their attorney. The fourth was settled for a nominal amount to end the case and avoid litigation.
Did You Invest With Joseph La Scala?
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