According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Frank Giacalone (Giacalone) has been subject to two customer complaints. Giacalone is currently registered with Aegis Capital Corp. (Aegis). In June 2016 a customer filed a complaint alleging a number of securities law violations including that the broker made engaged in churning (excessive trading), unauthorized trading, and breach of fiduciary duty among other claims. The claim alleged $128,319 in damages and was settled.
In June 2015, another customer filed a complaint alleging unsuitable investment recommendations and claiming $107,969 in damages. The claim 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 complaints against Giacalone are unusual compared to his peers. According to newsources, only about 7.3% of financial advisors have any type of disclosure event on their records among brokers employed from 2005 to 2015. Brokers must publicly disclose reportable events on their CRD customer complaints, IRS tax liens, judgments, investigations, and even criminal matters. However, studies have found that there are fraud hotspots such as certain parts of California, New York or Florida, where the rates of disclosure can reach 18% or higher. Moreover, according to the New York Times, BrokerCheck may be becoming increasing inaccurate and understate broker misconduct as studies have shown that 96.9% of broker requests to clean their records of complaints are granted.
Giacalone entered the securities industry in 2001. From December 2008 until December 2012 Giacalone was associated with Obsidian Financial Group, LLC. Since November 2012 Giacalone has been associated with Aegis out of the firm’s Melville, New York office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.