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Articles Posted in Churning

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Eric Nicolassy (Eric Edward Nicolassy CRD# 6244539) is a broker currently registered with Network 1 Financial Securities Inc. (CRD#: 13577) of Red Bank, NJ. His previous employers include Woodstock Financial Group, Inc. (CRD#:38095), also of Red Bank, NJ, Alexander Capital, L.P. (CRD#:40077) and Woodstock Financial, both of Staten Island, NY. He has been in the industry since 2014. On 10/04/2021, a client filed a dispute with allegations of “Suitability, Excessive Trading, Unauthorized Trading, Breach of Fiduciary Duty.”  The client’s requested damages total $103,056.69. Nicolassy denies the allegations. This dispute is currently pending. FINRA initiated an investigation into this client dispute. Its findings concluded that from August 2018 through July 2019, Nicolassy excessively and unsuitably traded in four customer accounts, one of whom was an 83-year-old retired real estate broker. Between 5/29/2019 and 5/16/2019, Nicolassy also exercised discretionary authority to effect at least 18 trades in four customer accounts without getting prior written authorization from them. This activity occurred during his employment at Woodstock Financial Group. The elderly customer paid $71,409.09 in commissions and $10,410 in trade costs and margin interest, experiencing losses of more than $125,000.Eric Nicolassy (Eric Edward Nicolassy CRD# 6244539) is a broker currently registered with Network 1 Financial Securities Inc. (CRD#: 13577) of Red Bank, NJ. His previous employers include Woodstock Financial Group, Inc. (CRD#:38095), also of Red Bank, NJ, Alexander Capital, L.P. (CRD#:40077) and Woodstock Financial, both of Staten Island, NY. He has been in the industry since 2014. Continue reading ›

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As a Securities and Exchange Commission report found, options trading is highly technical and involves holding stocks for short periods of time. Given the complexity of these deals, customers frequently depend on their brokers to make almost all of their trading decisions. Unscrupulous brokers know this, and they use their customers’ reliance for churning—when a broker engages in excessive trading on customers’ behalf to generate more commissions. But churning is illegal, and brokers who have engaged in churning can be required to compensate their clients for related losses. Because customers rely so heavily upon brokers for options trades, brokers have additional requirements for making these trades. For example, they must know the customers’ financial position, their investment goals, and their age. And customers must understand the risks of options training. But it isn’t enough for them to understand that options trading is risky, generally speaking. The brokers should explain the risks of each specific deal. And they should weigh if their customers understand the trade and have the financial wherewithal to make it, before the trade.As a Securities and Exchange Commission report found, options trading is highly technical and involves holding stocks for short periods of time. Given the complexity of these deals, customers frequently depend on their brokers to make almost all of their trading decisions. Unscrupulous brokers know this, and they use their customers’ reliance for churning—when a broker engages in excessive trading on customers’ behalf to generate more commissions. But churning is illegal, and brokers who have engaged in churning can be required to compensate their clients for related losses. Continue reading ›

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Terms of a recent letter of Acceptance, Waiver, and Consent (AWC) that Aegis Capital Corp. submitted to FINRA require the New York-based broker-dealer to repay customers for alleged rule violations related to churning or excessive trading in customer accounts. Aegis was also ordered to pay monetary sanctions, and the AWC settled the claims, and Aegis does not admit or deny FINRA’s findings.  The AWC states that restitution is to be paid to certain customers “in the total amount of $1,692,256.44.”Terms of a recent letter of Acceptance, Waiver, and Consent (AWC) that Aegis Capital Corp. submitted to FINRA require the New York-based broker-dealer to repay customers for alleged rule violations related to churning or excessive trading in customer accounts.

Aegis was also ordered to pay monetary sanctions, and the AWC settled the claims, and Aegis does not admit or deny FINRA’s findings. Continue reading ›

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Joseph La Scala (Joseph Brian La Scala CRD# 3070261) is a registered broker and a previously registered investment advisor whose current employer is Aegis Capital Corp. (CRD#: 15007) of Melville, NY. His previous employers include Paulson Investment Company, Inc. (CRD#:5670), Gunnallen Financial, Inc. (CRD#:17609) of Hauppauge, NY, and Investec Ernst & Company (CRD#:266) of New York, NY.  He has been in the industry since 1998. 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. Joseph La Scala (Joseph Brian La Scala CRD# 3070261) is a registered broker and a previously registered investment advisor whose current employer is Aegis Capital Corp. (CRD#: 15007) of Melville, NY. His previous employers include Paulson Investment Company, Inc. (CRD#:5670), Gunnallen Financial, Inc. (CRD#:17609) of Hauppauge, NY, and Investec Ernst & Company (CRD#:266) of New York, NY.  He has been in the industry since 1998. Continue reading ›

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Todd Kling (Todd Franklin Kling CRD# 3034284) is a currently registered broker and investment advisor employed with Joseph Stone Capital L.L.C. (CRD#: 159744) in New York, NY. His previous employers include Royal Alliance Associates, Inc. (CRD#:23131), First Midwest Securities, Inc. (CRD#:21786), and FMSI Advisers (CRD#:21786), also of New York, NY. His first employer, First Republic Group, LLC (CRD#: 39781), was expelled by FINRA on 9/23/2009. He has been in the industry since 1999. According to a FINRA disciplinary action dated 12/17/2021, Kling was found to have excessively and unsuitably traded one customer's account. This particular client was not only a retired psychiatrist but also a senior investor. Between March 2018 and November 2019, Kling recommended that the client place a total of 115 trades in his account. The client accepted Kling’s recommendations and made the trades. The customer’s account had an average month end equity of $5,414,465, resulting in an annualized turnover rate of more than 12. The trades recommended by Kling caused this customer to pay commissions, trading costs and margin interests that totaled $153,879.00. This trading resulted in an annualized cost to equity ratio of more than 35%. For the client to break even, the customer’s account would have had to grow by more than 35% annually just to reach the “break-even point.”Todd Kling (Todd Franklin Kling CRD# 3034284) is a currently registered broker and investment advisor employed with Joseph Stone Capital L.L.C. (CRD#: 159744) in New York, NY. His previous employers include Royal Alliance Associates, Inc. (CRD#:23131), First Midwest Securities, Inc. (CRD#:21786), and FMSI Advisers (CRD#:21786), also of New York, NY. His first employer, First Republic Group, LLC (CRD#: 39781), was expelled by FINRA on 9/23/2009. He has been in the industry since 1999. Continue reading ›

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Joseph Fedorko (Joseph Michael Fedorko CRD#] 2007317) is a previously registered broker whose last known employer was Laidlaw & Company (UK) LTD. (CRD#:119037) of Greenwich, CT. His previous employers include Oppenheimer & Co. Inc. (CRD#:249) of Stamford, CT, Josephthal & Co., Inc. (CRD#:3227) and Gruntal & Co., L.L.C. (CRD#:372), both of New York, NY. He has been in the industry since 1989. Fedorko has a total of 19 disclosures dating back to 1995. However, the most recent disclosure is from FINRA, after he excessively traded in the account a married senior couple from January 1, 2014, to December 31, 2019. He exercised de facto control over the couple’s account, and the couple trusted his recommendations. During this period, Fedorko and his firm (Laidlaw) exercised more than 1,200 transactions in the customers’ account. This excess trading led to losses of approximately $1.1 million, known as “churning.” However, the trading also generated $760,000 in commissions and markups for the firm, with Fedorko receiving 25% of the commissions and markups. After the customers filed a claim, the firm reimbursed them for their losses and closed their arbitration.Joseph Fedorko (Joseph Michael Fedorko CRD#] 2007317) is a previously registered broker whose last known employer was Laidlaw & Company (UK) LTD. (CRD#:119037) of Greenwich, CT. His previous employers include Oppenheimer & Co. Inc. (CRD#:249) of Stamford, CT, Josephthal & Co., Inc. (CRD#:3227) and Gruntal & Co., L.L.C. (CRD#:372), both of New York, NY. He has been in the industry since 1989. Continue reading ›

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Robert Anthony Guidicipietro (CRD#: 1588069, aka “Robert A. Peters”) is a currently registered broker and investment advisor employed at Alexander Capital, L.P. (CRD#: 40077) of New York, NY. His previous employers include Arive Capital Markets (CRD#:8060) of Bay Ridge, NY, Aegis Capital Corp. (CRD#:15007), Holmdel, NJ, and Obsidian Financial Group, LLC (CRD#:104255, expelled by FINRA on 10/16/2013) of Red Bank, NJ. He has been in the industry since 1991. The most recent allegation of misconduct came from Guidicipietro’s tenure at Arive. From January 2019 through November 2019, Guidicipietro engaged in “excessive and unsuitable trading, including the use of margin” in the account of an elderly investor. The client, a 78-year-old retired supervisor from New York's Metropolitan Transit Authority, had a conservative investment objective and was not a seasoned investor. Guidicipietro then recommended to the client that he place a total of 56 trades in his account, all of which were on margin. Because the account setup with a cost-to-equity ratio of 34 required the customer’s account to grow by more than 34% to break even, the customer ultimately lost $35,219.74 in fees and commissions.Robert Anthony Guidicipietro (CRD#: 1588069, aka “Robert A. Peters”) is a currently registered broker and investment advisor employed at Alexander Capital, L.P. (CRD#: 40077) of New York, NY. His previous employers include Arive Capital Markets (CRD#:8060) of Bay Ridge, NY, Aegis Capital Corp. (CRD#:15007), Holmdel, NJ, and Obsidian Financial Group, LLC (CRD#:104255, expelled by FINRA on 10/16/2013) of Red Bank, NJ. He has been in the industry since 1991. Continue reading ›

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