Complaint Pending Against Broker Adam Maggio for Alleged Churning

Adam Maggio (CRD#: 4177365) is a registered Broker at VCS Venture Securities in Mineola, NY.

Broker’s Background

He entered the securities industry in 2002 and previously worked for First Midwest Securities, Inc.; J.P. Turner & Co., LLC; Brundyn Securities, Inc.; The Merchanthouse Securities, Inc.; North American Clearing, Inc.; and KSH Investment Group, Inc.

Current And Past Allegations Of Conduct Leading To Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in January 2022, a customer complaint was filed against Adam Maggio. The FINRA sanction states, “CHURNING, NEGLIGENCE AND UNSUITABILITY, FAILURE TO SUPERVISE, UNAUTHORIZED TRADING, BREACH OF FIDUCIARY DUTY, BREACH OF CONTRACT, UNJUST ENRICHMENT, NEGLIGENT MISREPRESENTATION AND OMISSIONS, LOST OPPORTUNITY DAMAGES, AND PUNITIVE DAMAGES.” The dispute is pending, and $2M in damages are sought.

In addition, Adam Maggio has been the subject of three customer complaints and a regulatory disclosure, including the following:

  • December 2021 — “Without admitting or denying the findings, Maggio consented to the sanctions and to the entry of findings that he failed to reasonably supervise trading in certain customer accounts for potentially excessive activity. The findings stated that Maggio failed to identify red flags of excessive trading. Maggio did not review exception reports that flagged accounts with high commission-to-equity ratios. Instead, Maggio tried to identify excessively traded accounts using his own manual calculations, which compared the commissions charged in an account to the account’s current value, rather than its average net equity, and which often understated the cost-to-equity ratio. On certain occasions, Maggio’s manual review did not identify accounts that had red flags of excessive trading, including accounts with cost-to-equity ratios greater than 20 percent. As a result, certain accounts continued to be actively traded and were charged high commissions. The findings also stated that Maggio failed to reasonably respond to red flags of excessive trading. On certain occasions, Maggio responded to red flags of excessive trading by restricting the commissions that representatives could charge on individual trades, but he did not limit the aggregate costs and commissions charged to the affected accounts. As a result, representatives could place more frequent trades in a customer’s account and thereby continue to charge customers similar aggregate commissions. Maggio also did not restrict commissions on certain trades where the customer made a realized gain, irrespective of the overall amount of commissions that had been charged.” FINRA sanctioned Adam Maggio by suspending him from working in any principal capacity for five months beginning January 13, 2022 and ending June 2, 2022. Adam Maggio was also directed to pay a fine of $5,000. For a copy of the FINRA sanction, click here.
  • March 2009 — “CLIENT ALLEGED UNSUITABLE AND UNAUTHORIZED TRADING.” The customer dispute was settled for $14,999.99.
  • May 2007 — “FAILURE TO FOLLOW INSTRUCTIONS.” Damages of $131,929.00 were sought but the dispute was closed with no action.
  • March 1993 — “CRIMINAL SALE OF MARIJUANA 4TH DEGREE, CRIMINAL SALE OF MARIJUANA 3RD DEGREE, CRIMINAL SALE OF MARIJUANA 2ND DEGREE, CRIMINAL SALE OF MARIJUANA 1ST DEGREE, CRIMINAL POSSESSION OF MARIJUANA 2ND DEGREE, CRIMINAL POSSESSION OF MARIJUANA 5TH DEGREE.” Adam Maggio was found guilty of a Class E felony and received one month of incarceration and five years’ probation; he was also ordered to pay restitution.
  • June 1992 — “ASSAULT 2ND DEGREE FELONY PLEA.” The plea required three years’ probation and payment of restitution.

For a copy of Adam Maggio’s FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.

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. 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.

The Wolper Law Firm, P.A. represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, P.A., is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]