According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Joseph Ambrosole (Ambrosole) has been subject to two customer complaints, two regulatory actions, and one tax lien during his career. Ambrosole is currently employed by Joseph Stone Capital L.L.C. (Joseph Stone Capital). One of the the customer complaints against Ambrosole concern allegations of high frequency trading activity also referred to as churning and unsuitable investments.
In August 2018 a customer filed a complaint alleging that Ambrosole violated the securities laws by engaging in common law fraud, breach of fiduciary duty, and negligence causing $100,000 in damages. The claim is currently pending.
In March 2018 a customer filed a complaint alleging that Ambrosole violated the securities laws by engaging in churning, unsuitable investments, and overconcentration causing $275,000 in damages. The claim is currently pending.
In addition, Ambrosole has one financial disclosure concerning a tax lien for $57,199. This information has been found to be material for investors to have because an advisor who cannot manage his own finances is a relevant factor for investors to consider. In addition, a broker in financial distress may be influenced to recommend high commission products or strategies.
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.
According to newsources, a study revealed that 7.3% of financial advisors had a customer complaint on their record when records from 2005 to 2015 were examined. Brokers must publicly disclose reportable events on their BrokerCheck reports that include customer complaints, IRS tax liens, judgments, investigations, terminations, and criminal cases. In addition, research has show a disturbing pattern with troublesome brokers where brokers with high numbers of customer complaints are not kicked out of the industry but instead these brokers are sifted to lower quality brokerage firms with loose hiring practices and higher rates of customer complaints. These lower quality firms may average brokers with five times as many complaints as the industry average.
Ambrosole entered the securities industry in 2011. From April 2015 until July 2015 Ambrosole was registered with Joseph Stone Capital. From August 2015 until September 2016 Ambrosole was associated with Meyers Associates, L.P. From July 2017 until November 2017 Ambrosole was registered with Alexander Capital, L.P. Finally, since November 2017 Ambrosole has again been registered with Joseph Stone Capital out of the firm’s New York, New York office location.
At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to excessive trading and churning violations. Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.