Broker Investigation: Customer Complaints Against Broker John Catalfio

shutterstock_88744093According to the BrokerCheck records kept by Financial Industry Regulatory Authority (FINRA) broker John Catalfio (Catalfio) has been the subject of at least 3 customer complaints, one financial matter, and one employment termination. The customer complaints against Catalfio allege securities law violations that claim churning and excessive trading and unsuitable investments among other claims. One customer complaint alleges that Catalfio recommended an unsuitable investment in a private placement convertible note in the company Olympus Pacific Minerals, Inc., k/n/a Besra Gold Inc. (Besra). Besra is a gold mining company.

Catalfio entered the securities industry in 1990. Since January 2004, Catalfio has been associated with brokerage firm Euro Pacific Capital, Inc. out of the firm’s Scottsdale, Arizona branch office location.

Churning is investment trading activity in the client’s account that serves no reasonable purpose for the investor and is transacted solely to profit the broker. 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. Certain commonly used measures and ratios used to determine churning help evaluate a churning claim. These ratios look at how frequently the account is turned over plus whether or not the expenses incurred in the account made it unreasonable that the investor could reasonably profit from the activity.

The number of customer complaints against Catalfio is high relative to his peers. According to InvestmentNews, only about 12% of financial advisors have any type of disclosure event on their records. Brokers must publicly disclose certain types of reportable events on their CRD including but not limited to customer complaints. In addition to disclosing client disputes brokers must divulge IRS tax liens, judgments, and criminal matters. However, FINRA’s records are not always complete according to a Wall Street Journal story that checked with 26 state regulators and found that at least 38,400 brokers had regulatory or financial red flags such as a personal bankruptcy that showed up in state records but not on BrokerCheck. More disturbing is the fact that 19,000 out of those 38,400 brokers had spotless BrokerCheck records.

Gana LLP represents investors who have suffered investment losses due to broker wrongdoing, such as churning and unsuitable investments. The majority of these claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.