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Regulation and Compliance > Federal Regulation > FINRA

FINRA Suspends, Fines 2 NY Brokers Over Reg BI Infractions

By Melanie Waddell

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The Financial Industry Regulatory Authority has suspended and fined two New York-based brokers for violating the Securities and Exchange Commission’s Regulation Best Interest.

According to the orders, both brokers, Todd Anthony Cirella and Edward Scott Short, were employed by Laidlaw & Co., and recommended a series of trading in accounts that was excessive, unsuitable and not in customers’ best interest.

FINRA levied its first Reg BI-related fine last October.

According to FINRA, between June 2020 and January 2021, Cirella recommended 46 transactions in a 60-year-old customer’s account.

During this period, the trading in the customer’s account generated $27,566 in commissions and resulted in approximately $12,000 in trading losses, an annualized cost-to-equity ratio of 37.65%, and an annualized turnover rate of 20.39, FINRA’s order against Cirella states.

“The high cost-to-equity ratio meant the customer’s account would have to grow by more than 37% annually just to break even, making it very difficult for the customer to realize a profit,” FINRA said.

Cirella was suspended for three months and was ordered to pay a $5,000 fine and $27,566 in restitution.

Short entered the securities industry in 1994 and in October 2012 became registered as a general securities rep through an association with Laidlaw. He is not currently associated with a FINRA member, but remains subject to FINRA’s jurisdiction.

According to his BrokerCheck profile, Short has worked at firms that have been expelled by FINRA.

Between July 2018 and December 2020, Short, according to FINRA, recommended 204 transactions in the customer’s account.

During this period, the trading in the customer’s account generated $116,859 in commissions and resulted in approximately $185,000 in trading losses, an annualized cost-to-equity ratio of 76.53%, and an annualized turnover rate of 47.49, FINRA’s order states.

“The high cost-to-equity ratio meant the customer’s account would have to grow by more than 76% annually just to break even,” the order states.

Short was suspended for seven months and ordered to pay a $5,000 fine and $116,859 in restitution.

Melanie Waddell

@Think_MelanieW

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