Financial Advisor Christian De Berardinis Suspended by FINRA for Allegedly Selling Away

• October 16, 2024
• Morgan Stanley

Christian De Berardinis (CRD#: 4312327) is a registered investment advisor and a previously registered broker.

Broker’s History

He entered the securities industry in 2001 and previously worked with Banc of America Securities LLC; Citigroup Global Markets Inc.; J.P Morgan Securities Inc.; Oppenheimer & Co. Inc.; Phoenix Derivatives Group, LLC; J.P Morgan Securities LLC; and Morgan Stanley.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in September 2024, without admitting or denying the findings, De Berardinis consented to the sanctions and to the entry of findings that he participated in private offerings of securities that raised $2.45 million from customers of his member firm without providing prior written notice to or receiving approval from his firm. The findings stated that De Berardinis introduced the firm customers to the CEO of a dairy company and recommended that they invest in the company. De Berardinis also facilitated the customers’ investments by providing them with information about the investment. In some cases, De Berardinis assisted customers with paperwork and, at his customers’ requests, transferred funds from the customers’ firm accounts to the company to fund their investments. De Berardinis received $22,500 from the company in referral fees. De Berardinis also falsely responded to questions about whether he had participated in private securities transactions on annual firm compliance questionnaires. As a result, Respondent consented to the imposition of the following sanctions:

• a 24-month suspension from associating with any FINRA member in all capacities;
• a $15,000 fine;
• disgorgement of $22,500 plus interest.

For a copy of the FINRA Disciplinary Action Details, click here.

In addition, Christian De Berardinis has also been the subject of two other disclosures:

• June 2023— Voluntary Resignation from MSWM, “Allegations of involvement with offers or sales of a security not approved by the firm.”
• March 2023—“ Claimants allege, inter alia, the financial advisor solicited outside investment opportunities not authorized from the firm from February 20, 2020 to March 1, 2023.” The customer dispute settled for $1,350,000.

For a copy of Christian De Berardinis’ FINRA BrokerCheck, click here.

We Help Investors Recover Investment Losses

Pursuant to FINRA Rule 3270, outside business activities in which Financial Advisors become involved must be disclosed.  FINRA Rule 3280 prohibits Financial Advisors from engaging in Private Securities Transactions, which are securities transactions that take place away from the employing brokerage firm.  The purpose of these rules is to ensure that Financial Advisors do not engage in selling away.  The Financial Industry Regulatory Authority (FINRA) strictly prohibits financial advisors from “selling away” or selling securities and investments to clients that are not offered by the brokerage firm with which they are employed. For example, it is illegal and a violation of industry rules for a financial advisor to recommend or even suggest that a client invest in the financial advisor’s own business or a business operated by his or her friends or family. It is not necessary that the financial advisor earn any compensation for recommending an outside investment.

The purpose behind this prohibition is to ensure that a financial advisor only offers to sell securities that have been vetted by his or her employer brokerage firm through a rigorous due diligence process. Most brokerage firms have an approved list of investments, products, and research that can be provided or made available to clients. Any deviation by the financial advisor from the approved product list may constitute selling away.

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.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, 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.