According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker John Lopinto (Lopinto), previously associated with Worden Capital Management LLC, has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Lopinto recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 10, 2022.
Without admitting or denying the findings, LoPinto consented to the sanctions and to the entry of findings that he excessively traded customers’ accounts. The findings stated that LoPinto engaged in quantitatively unsuitable trading in customer accounts. LoPinto recommended high frequency trading and his customers routinely followed his recommendations and, as a result, LoPinto exercised de facto control over the customer’s accounts. LoPinto’s trading was excessive and unsuitable given the customers’ investment profiles. As a result of LoPinto’s excessive trading, the customers suffered collective realized losses of $240,331 while paying total trading costs of $205,523, including commissions of $161,706. The findings also stated that LoPinto exercised discretion to effect trades in a customer’s account without prior written authorization. LoPinto charged the customer a total of $21,632 in commissions to place the trades. The customer did not provide written authorization for LoPinto to exercise discretion in the account and LoPinto’s member firm did not accept the account as a discretionary account.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $89,887.74 on January 15, 2021.
Churning and quantitative suitability, and misrepresentation and unsuitability. The alleged activity occurred between April\<char_lb_r>\, 2018 and October 2019.
FINRA BrokerCheck shows a final customer complaint on September 18, 2020.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 203(e), 203(f), and 203(k) of the Investment Advisers Act of 1940 (‘Advisers Act’) against Keyport Venture Advisors LLC (‘Keyport Advisors’), John M. LoPinto (‘LoPinto’), and Robert R. Wilkos (‘Wilkos’) (collectively, ‘Respondents’). These proceedings concern disclosure violations by unregistered investment adviser Keyport Advisors and its two principals, LoPinto and Wilkos, while selling interests to individual retail investors in Keyport Venture Partners LLC Fund (‘Keyport Fund’), a pooled investment vehicle that sought to invest in shares and interests of pre-IPO companies. Respondents raised over $1.5 million from individual investors and successfully made investments in pre-IPO companies for various series in the Keyport Fund. A few months after the fund’s inception, LoPinto and Wilkos misrepresented to potential investors that one particular new series of the fund already held shares of its intended investment, a pre-IPO online rental marketplace (‘Company A’). In reality, Respondents knew they were having difficulty locating shares of Company A for the new series, and they were not able to secure an offer until several months after investors had invested $198,000 in the new series. As a result their conduct, Respondents willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-8 promulgated thereunder.
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. This Reg BI standard of care applies to registered representatives making recommendations to customers in the purchase, sale, or exchange of securities or the implementation of investment strategies involving securities and non-securities. The rule also applies to the handling of opening accounts such as account transfers and types of accounts being recommended to be opened. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. Reg BI was meant to enhance the duties that registered representatives have to their clients by applying fiduciary principles to transactions and investment strategies by prohibiting brokers from placing their own financial interests ahead of the best interests of their client – the investor. There are different sub-parts of the Reg BI rule that financial professionals must comply with when providing advice. Among those is the duty of care obligation that mandates associated persons to evaluate investment options, review and be knowledgeable the risks and rewards of the investment or service, compare alternative investment products, and ensure that the overall investment strategy aligns with the client’s goals and is in their best interests.
Next, the broker must understand the investor’s investment background and profile. A customer’s profile includes information that describes the investor’s financial situation and needs. Information here will include their outside securities accounts and investments; relevant assets and debts; tax bracket; age; liquidity needs; risk tolerance; investment time horizon; experience with investing; investment objectives; and any other relevant information that the investor may choose to disclose pertinent to their situation. Finally, the financial advisor must use their knowledge of both their reasonable diligence into investment options as well as their knowledge of the investor’s client specific needs to consider reasonably available investment options. Those investment options must allow the broker to determine that there is a reasonable basis that the recommendation is in the retail investor’s best interest. Finally, an advisor must also analyze the specific account features offered and determine whether their client can benefit from them in order to meet their care obligations. While securities and investments come with costs that must be considered, the type of securities account also has changes the cost equation for the investor and can change the retail customers’ future investment returns. The associated person must consider the different types of securities accounts for their client and determine whether or not the cost or features are reasonably needed for the client or if the customer’s current account costs and features are superior to solutions available to the advisor. In any event, the type of account and services recommended must be in the investor’s best interest.
Lopinto has been in the securities industry for more than 17 years. Lopinto has been registered as a Broker with Worden Capital Management LLC since 2016.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. 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.