Dominic Tropiano Accused of Selling Unsuitable Leveraged ETFs

shutterstock_24531604-200x300Our securities fraud attorneys are investigating customer complaints filed with The Financial Industry Regulatory Authority (FINRA) against Dominic Tropiano (Tropiano) currently not associated with any broker-dealer.  The complaints against Tropiano allege unsuitable investments, unauthorized trading, fraud, and breach of fiduciary duty among other claims.  Many of the complaints involve leveraged and non-traditional exchange traded funds (ETFs) securities.  According to brokercheck records Tropiano has been subject to five customer complaints.

The most recent complaint was filed in August 2016 alleging investments in leveraged ETFs, violations of the Ohio Securities Act and FINRA rules, negligence, unsuitability among other claims.  The complaint alleged $800,000 in damages and is currently pending.

As a background, non-traditional ETFs are speculative securities that are rarely appropriate for retail investors.  Non-traditional ETFs are usually used by institutional investors engaging in sophisticated strategies.  Non-traditional ETFs use a combination of derivatives instruments and debt to multiply returns on an underlining asset basket such as a stock, commodity, currency or other index.  These funds often attempt to generate 2 to 3 times the return of the underlining asset class.  Non-Traditional ETFs are also used to earn the inverse – or opposite – result of the return of the benchmark.  Non-Traditional ETFs are generally designed to be used only for short term trading – in many cases for only holding the security for a single day.

Because of these risks, the Securities Exchange Commission (SEC) has warned that most non-traditional ETFs reset daily and FINRA has stated that Non-Traditional ETFs are typically not suitable for most retail investors.  Consequently these funds typically have very limited uses and in many cases are completely inappropriate for retail investors. Increasingly, brokerage firms are prohibiting the solicitation of these investments to its customers due to suitability concerns.

Tropiano entered the securities industry in 2004.  From August 2008 through April 2015, Tropiano was registered with Key Investment Services LLC.  From May 2016 until June 2016, Tropiano was associated with America Northcoast Securities, Inc. out of the firm’s Cleveland, Ohio office location.

The number of events listed on Tropiano brokercheck 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’s securities fraud attorneys represent investors who have suffered securities losses due to the mishandling of their accounts due to claims of fraud and negligence.  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.