According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Ron Filoramo (Filoramo), previously associated with Morgan Stanley, has at least 2 disclosable events. These events include 2 regulatory events, alleging that Filoramo recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on October 11, 2023.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, against Ronald E. Filoramo (‘Filoramo’ or ‘Respondent’).\<char_lb_r>\, Respondent has submitted an Offer of Settlement (the ‘Offer’) which the Commission has determined to accept.\<char_lb_r>\, The commission finds that on October 2, 2023, a judgment was entered by consent against Filoramo permanently enjoining him from future violations of Section 17(a) of the Securities Act of 1933, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Ronald E. Filoramo, Civil Action Number 0:23-cv-61858, in the United States District Court for the Southern District of Florida.\<char_lb_r>\, The Commission’s complaint alleged, among other things, that from approximately February 2017 through October 2021, Filoramo misappropriated approximately $761,000 from two of his long-standing brokerage customers. Filoramo represented that he would invest the customers’ funds in securities he recommended, but instead misappropriated the money for his personal benefit, namely for gambling and related expenses. To conceal his fraud, Filoramo recommended to the customers that they purchase bonds from a purported MSSB client and instructed them to send their funds directly to that client. Filoramo also created fake documents that purported to show the bond purchases. In fact, the customers unknowingly transferred their funds to bank accounts controlled by one of Filoramo’s friends who, in turn, transferred the funds to a bank account controlled by Filoramo. No bonds were ever purchased, and Filoramo spent almost all of the money, mainly at casinos.
FINRA BrokerCheck shows a final customer complaint on September 18, 2023.
Without admitting or denying the findings, Filoramo consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its investigation into allegations that he fraudulently induced clients to transfer funds to purported investments that were never made.
Brokers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) standard of care under the Securities Exchange Act of 1934 which establishes a ‘best interest’ standard for broker-dealers and associated persons. 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. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest.
There are several different aspects of the rule that brokers must comply with. One of which is the care obligations which requires brokers to form a reasonable belief that their investment advice and recommendations are in the retail investor’s best interest. The care obligations includes three components. First, the advisor must have an understanding of the potential risks, rewards, and costs associated with a product, investment strategy, account type, or series of transactions. Next, the advisor must have a reasonable understanding of the specific retail investor’s investment profile. The customer’s profile information generally includes an investor’s financial situation and needs; investments; assets and debts; marital status; tax status; age; investment time horizon; liquidity needs; risk tolerance; investment experience; investment objectives and financial goals; and any other information the retail investor may disclose in connection with the recommendation or advice. 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.
Brokerage firms and advisors must also understand the features and limitations of various account types as part of meeting Reg BI’s care obligations. Firms typically offer a variety of account options and services with different trading costs, services, such as account and activity monitoring. An advisor’s recommendation as to what type of securities account to open can alter the customers’ overall costs and investment returns. The advisor must determine that the client can benefit from the type of account being recommended to be opened and in the investor’s best interest taking into account the costs, benefits, and needs of the client.
Filoramo has been in the securities industry for more than 23 years. Filoramo has been registered as a Broker with Morgan Stanley since 2011.
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.