Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Michael Dellaporta (Dellaporta), previously associated with B.b. Graham & Company, INC., has at least 2 disclosable events. These events include one customer complaint, one regulatory event, alleging that Dellaporta recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on April 14, 2021.
Without admitting or denying the findings, Dellaporta consented to the sanction and to the entry of findings that he refused to produce information and documents requested by FINRA in connection with its investigation into Dellaporta’s involvement in an outside business activity.
FINRA BrokerCheck shows a pending customer complaint with a damage request of $360,000.00 on January 11, 2021.
On or about July 2017, DELLAPORTA, in his capacity as a Registered Representative of FUSION, solicited [REDACTED] to make a substantial investment into Global Capital LLC, a/k/a 1st Global Capitol Financial Services (Global Capitol). Allegedly, respondents represented that Global Capitol was a Florida-based cash advance company and a safe and secure investment suitable for [REDACTED]’s investment objectives and providing a guaranteed rate of return. On or about 8/07/17, [REDACTED] allegedly ‘loaned’ $300,000 to Global Capitol, but the loan and loan agreement were allegedly unregistered securities. On or about 9/30/17, [REDACTED] allegedly ‘loaned’ a second $300,000 of Global Capitol, but as before, the loan and loan agreement were allegedly unregistered securities. The subject loan agreements should have been registered as securities with the SEC and Florida Securities authorities, but were allegedly not. Claimant does not have the second loan agreements but will allegedly obtain same in discovery.\<char_lb_r>\, \<char_lb_r>\, Allegedly, Global Capital was a Florida-based cash advance company that fraudulently raised more than $322 million from 3,600 investors between 2014 and 2018.
When your financial advisor is providing advice they must adhere to the SEC’s Regulation Best Interest (Reg BI) rule and standard of care. Reg BI replaced the former “suitability” rule and created a ‘best interest’ standard for brokerage firms and registered representatives. 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. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts.
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. 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 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. The associated person must then apply both their reasonable diligence into various investment options as well as the information gathered as to the investor’s specific needs when considering the investment recommendation. The broker must explore various alternative investment options available to address these needs and determine that there is a reasonable basis to believe that the recommendation or service being recommended 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.
Dellaporta has been in the securities industry for more than 42 years. Dellaporta has been registered as a Broker with B.b. Graham & Company, INC. since 2018.
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.