The Financial Industry Regulatory Authority (FINRA) has filed a complaint against broker Vito Balsamo (Balsamo) concerning allegations that Balsamo engaged in private securities transactions – also known as “selling away” – in ownership interests in a limited liability company called V.W. Industries, LLC (VWI) without first receiving written approval from his member firm. FINRA also alleged that Balsamo failed to provide testimony requested by FINRA staff.
According to the BrokerCheck records kept by FINRA Balsamo has been the subject of at least 4 customer complaints, 2 criminal matters, one regulatory action, and one judgment and lien over the course of his career. Customers have filed complaints against Balsamo alleging a litany of securities law violations including that the broker made unsuitable investments, unauthorized trades, breach of fiduciary duty, misrepresentations and false statements, and churning, among other claims. The claims involve different investment recommendations including claims involving equity securities among other speculative securities.
Balsamo entered the securities industry in 1991. From 1999 until May 2008, Balsamo was associated with Joseph Stevens & Company, Inc. Thereafter, from April 2008, until February 2012, Balsamo was associated with National Securities Corporation (National Securities).
All advisers have a fundamental responsibility to deal fairly with investors including making suitable investment recommendations. When brokers engage in churning the investment trading activity in the client’s account serves no reasonable purpose for the investor and is transacted to profit the broker through the generation of commission payments. The elements to establish a churning claim, which is considered a species of securities fraud, are excessive transactions of securities, broker control over the account, and intent to defraud the investor by obtaining unlawful commissions. A similar claim, excessive trading, under FINRA’s suitability rule involves just the first two elements.
The number of complaints made by investors against Balsamo is relatively large by industry standards. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Far fewer brokers have multiple customer complaints approaching the number of complaints made against Balsamo. Brokers must disclose different types of events, not necessarily all of which are customer complaints. These disclosures can include IRS tax liens, judgments, and even criminal matters. Brokers with liens on their records, such as Balsamo, may be motivated to engage in misconduct to generate additional income to pay off old debts.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of unsuitable investments. Our consultations are free of charge and the firm is only compensated if you recover.