Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) broker Michael Bastardi (Bastardi) has been subject to at least two customer complaints, one regulatory action, and one tax or lien judgment during his career. Bastardi was formerly employed by Chelsea Financial Services (Chelsea Financial) and National Securities Corporation (National Securities). The majority of the customer complaints against Bastardi concern allegations of high frequency trading activity also referred to as churning.
In May 2019 Bastardi consented sanctions and an industry bar from FINRA due to the findings that he refused to provide documents and information requested by FINRA in connection with an investigation into the allegations disclosed on a termination statement. FINRA found that the termination disclosure stated that Bastardi was the subject of a customer complaint alleging that he had engaged in unsuitable margin trading, unauthorized trading, fraud and forgery when he was registered through two member firms, resulting in damages of approximately $250,000.
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.
Bastardi entered the securities industry in 2012. From October 2012 through July 2014 Bastardi was associated with Dalton Strategi Investment Services Inc. From June 2014 until March 2016 Bastardi was registered with Securities America, Inc. From March 2016 until January 2018 Bastardi was registered with National Securities. Finally, from January 2018 until September 2018 Bastardi was registered with Chelsea Financial out of the firm’s Staten Island, 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.