FINRA settled allegations against general securities representative Anthony Tricario, previously of Aegis Capital Corp., that he engaged in excessive and quantitatively unsuitable trading in violation of FINRA Rules 2111 and 2010 in three of Aegis’s customers’ accounts between November 2014 and November 2015.
As part of his Advice, Wavier, and Consent (“AWC”) with FINRA, Anthony Tricario agreed to pay a $5,000 fine and to a six-month suspension from associating with any FINRA member.
FINRA rules prohibit representatives from engaging in transactions that are excessive and unsuitable in light of the particular customer’s investment needs and objectives. To gauge excessiveness, FINRA examines factors such as the turnover rate and cost-to-equity ratio. As explained by FINRA:
The turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities. The cost-to-equity ratio measures the amount an account must appreciate, or break-even, to cover commissions and other expenses so that a customer may begin to see a return. A turnover rate of six or a cost-to-equity ratio above 20% generally indicates that excessive trading has occurred.
Representatives may recommend such excessive trading to generate exorbitant commissions for themselves in managing investors’ accounts.
If your investment advisor has recommended transactions that you view as excessive, Fishman Haygood may be able to help. Please contact us to discuss your potential claims.