Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Angelo Piccone (Piccone), previously associated with IBN Financial Services, Inc., has at least 2 disclosable events. These events include one customer complaint, one tax lien, alleging that Piccone recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 29, 2025.
Without admitting or denying the findings, Piccone consented to the sanctions and to the entry of findings that he willfully violated Reg BI by recommending 11 sales of speculative, illiquid alternative investments totaling $457,000 to a retail customer. The finding stated that the customer had a moderate risk tolerance, an annual income of no more than $25,000, and a net worth, not including primary residence, of $587,438. The customer’s investment objectives were preservation of capital, current income, and funding retirement, and they did not include speculation. Piccone earned $23,905.81 in commission in connection with his recommendations of these alternative investments to the customer. As a result of Piccone’s recommendations, the customer became 77% concentrated in alternative investments, including a 15% concentration in speculative bonds. Piccone’s recommendations were not in the customer’s best interest based on her investment profile, including her moderate risk tolerance. The findings also stated that Piccone used his personal mobile device to exchange text messages with the customer to conduct securities business. In one of those communications, Piccone made an unbalanced, promissory and misleading statement to the customer regarding the prospects for recovery related to one of her investments. Because Piccone used an unapproved channel for business-related communications, the firm was unable to preserve those communications as required.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $90,000.00 on February 20, 2023.
Product was not suitable for client’s risk profile
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. The cost of the recommendation and information about the investor are always included in material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. So, rather than depending solely on the issuer for company information, a brokerage firm should conduct its own reasonable investigation.
Additional, it should be required to mandate broker disclosures for investor’s protection. Brokers are required by FINRA to reveal the events such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters on their public BrokerCheck reports. FINRA has acknowledged that recent studies provide evidence of the predictability of future regulatory and customer complaint issues for brokers with a history of such events. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Piccone has been in the securities industry for more than 38 years. Piccone has been registered as a Broker with IBN Financial Services, Inc. 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.