Financial Advisor Cynthia Giovacchino has been the Subject of Twelve Customer Disputes

• November 22, 2024
• LPL Financial

Cynthia Ann Giovacchino (CRD#: 3274194) is a registered broker and investment advisor with Osaic Institutions, Inc., in Seymour, CT.

Broker’s History

She entered the securities industry in 1999 and previously worked with Webster Investment Services, Inc.; Uvest Financial Services Group, Inc.; and LPL Financial LLC.

Current and Past Allegations of Conduct Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in September of 2024, Cynthia Giovacchino became the subject of a customer dispute alleging that, “ in May 2012 and December 2014 the representative recommended an investments in two real estate investment trusts that were unsuitable for the customer’s investment profile and risk tolerance.” The damage amount requested is $55,000.00 and the customer dispute is still pending.

In addition, Cynthia Giovacchino has been the subject of eleven other customer dispute which include:

• August 2024— Claimant alleges an alternative investment purchased in 2017 was illiquid and risky.” The damage amount requested is $300,000.00 and the customer dispute is still pending.
• May 2024—“Customer alleged unsuitability and misrepresentation of non-traded REIT and structured notes.” The customer dispute settled for $8,000.
• January 2024—“Customer alleged misrepresentation of structure barrier note.” The customer dispute settled for $10,673.97.
• January 2024—“Customer alleged misrepresentation and unsuitability.” The customer dispute settled for $48,583.00.
• January 2024—“Customer alleged misrepresentation of REIT as 3 year term.” The customer dispute settled for $13,500.
• December 2023—“Customer alleged unsuitable recommendation of structured note.” The customer dispute settled for $55,435.00.
• December 2023—“Customer alleged structured note was misrepresented as safe investment.” The customer dispute settled for $15,000.00.
• December 2023—“Customer alleged misrepresentation.” The customer dispute settled for $70,000.00
• August 2023—“Customer alleges that the advisor misrepresented that her market-linked notes were principally protected. Alleged Dates – 10/26/21-8/31/23.” The customer dispute settled for $27,727.72.
• January 2022—“The customer alleges that in 2014 the advisor recommended a REIT investment that was not suitable.” The customer dispute settled for $46,225.26.
• September 2021—“Customer alleges that between 2012 and 2015 representative made unsuitable investment recommendations in high-commission, illiquid alternative investments that were not appropriate for his investment objectives.” The customer dispute settled for $2,000.00.

For a copy of Cynthia Giovacchino’s FINRA BrokerCheck, click here.

 

What Are Structured Notes

Structured Notes are market-linked investments that offer a coupon to investors from the date of purchase through the date of maturity (typically 24 months). The payment of the aforementioned income is connected to the performance of underlying securities—typically individual stocks or stock indices. In this case, the Auto-call notes were each tied to the performance of between two or three underlying individual stocks. The prospectus of the Structured Notes dictates that if all of the underlying individual stocks remains at or above a certain price (i.e., the “Coupon Barrier”), all is good in the world and the investor will continue to receive the stated income payment. If, however, one of the underlying stocks falls to a price below the Coupon Barrier, the investor will no longer receive the stated income payment. It necessarily follows that having multiple underlying stocks in the basket of the Structured Notes is riskier than a single underlying stock because it is more likely that at least one stock, among multiple stocks, will decline in value.

Separate and apart from the Coupon Barrier that dictates whether the investor receives income, each Structured Notes additionally states that the stocks underlying the note are being benchmarked at a specific price, known as the “Initial Level.” If one of the underlying stocks declines to a certain level by the maturity date, known as the “Knock-in Barrier,” not only will the investor not receive income but they will be forced to purchase shares of the depreciated underlying stock at market value. This is problematic because the cost basis associated with those same shares is commensurate with the Initial Level. In other words, the investor will incur massive losses on day-one because they will own shares of stock worth far less than the Initial Level value assigned in the Structured Notes term sheet. If, on the other hand, the underlying stocks appreciate in value, investors do not get to participate in the upside and the issuer can call the note; hence the name Structured Notes.

Structured Notes and other forms of Structured Notes are speculative in nature. They are only appropriate for investors who are willing to subject their assets to significant portfolio decline.

We Help Investors Recover Investment Losses

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.

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.

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.