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Regulation and Compliance > Federal Regulation > FINRA

FINRA: Ex-Edward Jones Rep Made Over 800 Unauthorized Trades

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What You Need to Know

  • An ex-Edward Jones broker made 823 unauthorized trades in the accounts of a fundraising organization for a charitable hospital.
  • He also inaccurately identified himself as a senior vice president of a clearing firm he did not work for, FINRA says.
  • FINRA suspended him for six months and fined him $7,500.

The Financial Industry Regulatory Authority has suspended a former Edward Jones broker for six months and fined him $7,500 for allegedly making more than 800 transactions in four of his clients’ accounts without their authorization or consent, according to the industry self-regulator.

Albert L. DeGaetano also allegedly used a clearing firm’s online interface to order business cards identifying himself as a senior vice president of that clearing firm despite the fact that he was never even associated with or employed by it, according to FINRA. He went on to use those business cards in May, June and September 2019, FINRA said.

Additionally, DeGaetano inaccurately referred to the clearing firm as his employer in phone calls he made to Edward Jones and another individual in November 2019, according to FINRA.

Without admitting or denying FINRA’s findings, DeGaetano signed a FINRA letter of acceptance, waiver and consent on Nov. 11 in which he consented to FINRA’s sanctions. FINRA signed the letter, agreeing to the settlement Wednesday.

Edward Jones did not immediately respond to a request for comment Friday.

“Without admitting the allegations, Mr. DeGaetano accepted and consented to FINRA’s findings and the imposed sanctions for purposes of bringing finality to the matter and resolving the issues,” Joseph S. Simms, an attorney for the law firm Reminer who represented DeGaetano, told ThinkAdvisor by email.

DeGaetano was “happy to have the matter behind him so he can continue focusing on providing exemplary services to his clients,” Simms added.

From Pizza to Securities Violations

After leaving Dean Witter Reynolds in July 1997, DeGaetano left the sector for several years and was the owner of Eat More Pizza in Black Mountain, North Carolina between 2008 and 2015, according to his report on FINRA’s BrokerCheck website.

DeGaetano rejoined the industry in August 2015 when he became a general securities representative through an association with Edward Jones, according to FINRA.

However, Edward Jones filed a Form 5 Notice terminating him Feb. 22, 2019, over “concerns that [he] effected transactions and account activity inconsistent with the account’s purpose without speaking with authorized persons,” according to FINRA.

Fundraising Organization Left in the Dark

From December 2017 to November 2018, DeGaetano executed 470 securities transactions in the accounts of a fundraising organization for a charitable hospital without its authorization or consent, according to the FINRA AWC letter.

More on this topic

DeGaetano executed another 353 securities transactions after speaking with an employee of the client who was not an authorized party on the client’s firm accounts, the AWC letter alleged.

The 823 securities transactions in all, which included 389 purchases of exchange-traded fund bonds, had a total principal value of about $7.2 million and generated approximately $113,000 in total trading costs, according to FINRA.

In September 2018, DeGaetano also executed six securities transactions with a total principal value of about $30,721 in the individual firm accounts of three other Edward Jones customers without obtaining their authorization or consent for the transactions, FINRA alleged.

As a result of his actions, DeGaetano violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), according to FINRA.

2 Other Firms

In March 2019, DeGaetano became registered with FINRA as a GSR through an association with Atlanta-based broker-dealer International Financial Solutions (IFS) Securities. In a Form U5 dated Sept. 25, 2019, IFS reported DeGaetano’s voluntary termination.

In September 2019, DeGaetano became registered with FINRA again as a GSR through an association with Cabot Lodge Securities. However, in a Form U5 dated Nov. 27, 2019, Cabot Lodge reported DeGaetano’s termination for violations of firm policy relating to, among other things, communications with the public, according to FINRA.

Both IFS and Cabot Lodge had clearing arrangements with the same third-party FINRA member, FINRA said without identifying the clearing firm.

Cabot Lodge could not immediately be reached for comment on Friday.

IFS filed for Chapter 11 bankruptcy in April 2020 as a result of the unauthorized speculative bond trading of one of its brokers.

Keith Wakefield of Chicago was recently charged with one count of felony securities fraud for allegedly engaging in unauthorized speculative bond trading that cost IFS and others more than $30 million, according to the U.S. Attorney’s Office for the Northern District of Illinois and a criminal complaint it filed in U.S. District Court there.

(Pictured: Edward Jones Building; Image: Shutterstock)