The securities fraud lawyers of Gana LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) against broker John Prinzivalli (Prinzivalli). According to BrokerCheck records Prinzivalli has been the subject of at least two customer complaints, three financial disclosures, and one judgement or lien. The customer complaints against Prinzivalli allege a number of securities law violations including that the broker made unsuitable investments, breach of fiduciary duty, and churning (excessive trading) among other claims.
One complaint filed in October 2014 alleged $130,000 in damages due to unsuitable recommendations, high pressure sales tactics, and churning. The complaint is currently pending. Another complaint was filed in November 2010 alleging churning and unsuitable investments claiming $250,000 in damages. The complaint was settled.
When brokers engage in excessive trading, sometimes referred to as churning, the broker will typical trade in and out of securities, sometimes even the same stock, many times over a short period of time. Often times the account will completely “turnover” every month with different securities. This type of investment trading activity in the client’s account serves no reasonable purpose for the investor and is engaged in only to profit the broker through the generation of commissions created by the trades. Churning is considered a species of securities fraud. The elements of the claim 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 Prinzivalli 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.
Prinzivalli entered the securities industry in 2001. From May 2007 through June 2009, Prinzivalli was associated with J.P. Turner & Company, L.L.C. (JP Turner). From June 2009 until July 2011, Prinzivalli was associated with First Midwest Securities, Inc. From July 2011 until August 2012, Prinzivalli was associated with Salomon Whitney LLC. Finally, since August 2012 Prinzivalli has been associated with Cape Securities Inc. out of the firm’s Holtsville, New York office location.
The investment fraud 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.