FINRA Sanctions The Investment Center Broker Leon Vaccarelli Over Unauthorized Trades

shutterstock_138129767The securities lawyers of Gana LLP are investigating customer complaints against broker Leon Vaccarelli (Vaccarelli). The Financial Industry Regulatory Authority (FINRA) brought an enforcement action (FINRA No. 2014042302001) against Vaccarelli. In addition, there are at least two customer complaints against Vaccarelli and two judgements or liens. The customer complaints against Vaccarelli allege a number of securities law violations including that the broker misrepresented investments and mismanaged the account among other claims.

In a FINRA regulatory action against Vaccarelli, the agency alleged that between 2011 through 2015 Vaccarelli exercised discretion in four customers’ accounts. FINRA found that Vaccarelli exercised discretion even though he did not have written authorization from the customers to place discretionary trades. In addition, Vaccarelli’s brokerage firm had not approved and accepted the accounts as discretionary. FINRA also found that on four annual compliance questionnaires between 2011 and 2014, Vaccarelli falsely certified that he did not handle any customer accounts on a discretionary basis.

Advisors are not allowed to engage in unauthorized trading. Such trading occurs when a broker sells securities without the prior authority from the investor. All brokers are under an obligation to first discuss trades with the investor before executing them under NYSE Rule 408(a) and FINRA Rules 2510(b). These rules explicitly prohibit brokers from making discretionary trades in a customers’ non-discretionary accounts. The SEC has also found that unauthorized trading to be fraudulent nature because no disclosure could be more important to an investor than to be made aware that a trade will take place.

Vaccarelli entered the securities industry in January 1999. From May 2007 until February 2011, Vaccarelli was registered with QA3 Financial Corp. Since February 2011, Vaccarelli has been registered with The Investment Center, Inc. out of the firm’s Waterbury, Connecticut office location.

The number of customer complaints against Vaccarelli 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.

The investment attorneys at Gana LLP represent investors who have suffered securities losses due to the mishandling of their accounts. 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.