- October 25, 2022
- Network 1 Financial Securities
Charles Malico (CRD#: 1507282) is a previously registered Broker, who most recently worked at Network 1 Financial Securities.
He entered the securities industry in 1987 and previously worked for Network 1 Financial Securities, Inc.; MidAmerica Financial Services, Inc.; Global Arena Capital Corp; B.B. Graham & Company, Inc.; Liberty Partners Financial Services, LLC; Clark Dodge & Co.; J.P. Turner & Company, LLC; VFinance Investments, Inc.; Great Eastern Securities, Inc.; First Union Securities Financial Network, Inc.; Argent Securities, Inc.; Tasin & Co., Inc; Meyers Pollock Robbins, Inc.; Gaines, Berland, Inc.; Josephthal Lyon & Ross Inc.; Robert Todd Financial Corp.; The Stuart-James Company, Inc.; Vanderbilt Securities, Inc.; J.T. Moran & Co, Inc.; Sherwood Capital, Inc.; and First Jersey Securities, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in October 2022, FINRA sanctioned Charles Malico, imposing a civil and administrative penalty/fine of $5,000, and suspending him from all capacities for six months beginning October 17, 2022 and ending April 16, 2022. The FINRA sanction states, “Without admitting or denying the findings, Malico consented to the sanctions and to the entry of findings that he willfully violated the Best Interest Obligation under Rule 15l-1 of the Securities Exchange Act of 1934 (Regulation Best Interest or Reg BI) by recommending a series of transactions in a retail customer’s account that was excessive in light of the customer’s investment profile. The findings stated that the trades that Malico recommended in the customer’s account resulted in an annualized cost-to-equity ratio exceeding 158 percent – meaning that the customer’s account would have had to grow by more than 158 percent annually just to break even. Malico’s recommendations caused the customer to pay more than $54,000 in commissions and other trading costs, and made it virtually impossible for the customer to realize a profit. In fact, the customer lost more than $17,500 as a result of Malico’s recommendations.”
For a copy of the FINRA sanction, click here
In addition, Charles Malico has been the subject of seven customer complaints and various other disclosures, including the following:
- December 2021 — “Negligence, Breach of Fiduciary Duty, Negligent Supervision.” Damages of $65,000 are requested, and the customer dispute is pending.
- September 2015 — “Churning, unsuitability, breach of fiduciary duties.” The customer dispute is pending and $99,990 are requested.
- September 2008 — A tax judgment/lien was imposed on Charles Malico in the amount of $8,256.
- January 2008 — “UNAUTHORIZED TRADES” The customer dispute was settled for $3,645.76.
- April 2002 — A civil judgment/lien was imposed on Charles Malico in the amount of $9,499.87.
- September 2000 — “ALLEGED UNAUTHORIZED TRADING.” Damages of $29,815 are requested, and the customer dispute is pending.
- September 1994 — “UNAUTHORIZED TRADING.” The customer dispute was settled for $44,370.
- March 1993 — “UNSUITABILITY.” The customer dispute was settled for $15,000.
- November 1990 — “AS 1 OF 7 RESPONDENTS NAMED IN PROCEEDING IT WAS ALLEGED THAT UNSUITABLE MISREPRESENTED RECOMMENDATIONS RESULTED IN LOSSES.” The customer dispute was settled for $15,000.
- June 1981 — “ALLEGED ASSAULT 2ND DEGREE (NY STATUE 120.03)” The charges were resolved as follows: “GUILTY OF ASSAULT 3RD DEGREE (NY STATUTE 120.00) WHICH IS A MISDEMEANOR. PLACED ON PROBATION FOR 3 YEARS.”
For a copy of Charles Malico’s FINRA BrokerCheck, click here.
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Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.
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