The Financial Industry Regulatory Authority sanctioned yet another ex-broker who had been associated with First Standard Financial — a Red Bank, New Jersey-based broker-dealer whose license was canceled by FINRA — over excessive trading in customers’ accounts.
Without admitting or denying the findings, Frank Venturelli signed a letter of acceptance, waiver and consent on June 12 in which he agreed to be suspended from associating with any FINRA member firm, in all capacities, for 11 months and provide partial restitution to his customers, in the amount of $30,000. FINRA accepted the letter on Friday.
Timothy Feil, a partner at New York law firm Carmel, Milazzo & Feil, which represented Venturelli, did not immediately respond to a request for comment on Monday.
Venturelli first registered with FINRA as a general securities representative through his association with First Standard. From Nov. 18, 2014, through March 23, 2016, Venturelli was registered with FINRA as a rep through First Standard. On April 22, 2016, he again registered with FINRA as a rep through First Standard, where he remained until his registration was terminated Sept. 25, 2019.
According to a customer dispute disclosure on Venturelli’s profile at FINRA’s BrokerCheck website, a client requested damages of $50,000 over excessive trading and unsuitable trades by the broker. It is still pending, according to BrokerCheck, which also noted Venturelli is no longer registered as a broker.
Between July 2016 and November 2018, Venturelli excessively traded three customers’ accounts in violation of FINRA Rules 2111 (governing suitability of investment strategies) and 2010 (governing standards of commercial honor and principles of trade).
During that period, Venturelli engaged in “quantitatively unsuitable trading in the accounts of customers AR, LK, and RK,” FINRA claimed, adding the rep “recommended the trading in the three customers’ accounts and they followed his recommendations.” His trading of the three accounts “resulted in high turnover rates and cost-to-equity ratios as well as significant losses,” FINRA alleged.
AR’s account incurred losses of $96,985 and paid $57,355 in commissions and fees, while LK’s account incurred losses of $133,748 and paid $49,641 in commissions and fees and RK’s account incurred losses of $142,493 and paid $62,807 in commissions and fees, FINRA claimed.
On Oct. 31, 2019, the New Jersey Bureau of Securities issued a Summary Revocation Order against First Standard, revoking its registration in that state for, among other things, engaging in what the agency called a “fraudulent course of business that consisted of excessive, unsuitable, and frequently unauthorized short-term trading in customer accounts that generated commissions for First Standard and its agents at its customers’ expense.”
First Standard filed a Uniform Request Withdrawal from Broker-Dealer Registration on or around Nov. 5, 2019. FINRA went on to cancel its license in January, according to the firm’s profile on FINRA’s BrokerCheck website.