- February 8, 2022
- Aegis Capital Corp
Joseph LaScala, Jr. (CRD#: 3070261) is a dually registered Broker and Investment Advisor at Aegis Capital Corp. in Melville, NY.
He entered the securities industry in 1998 and previously worked for Paulson Investment Company, Inc.; Gunnallen Financial, Inc.; Investec Ernst & Company; and Royce 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, FINRA sanctioned Joseph LaScala, Jr., levying a civil and administrative penalty/fine of $7,500 and suspending him from all capacities for four months beginning February 22, 2022 and ending June 21, 2022. The FINRA regulatory action which gave rise to the suspension involved alleged excessive trading in customer accounts.
The FINRA sanction states, “Without admitting or denying the findings, LaScala consented to the sanctions and to the entry of findings that he engaged in excessive and quantitatively unsuitable trading in his customer’s account. The findings stated that LaScala engaged in short-term trading in the customer’s individual 401(k) account. LaScala decided which stocks to trade and when to trade them, and exercised discretionary authority in connection with the trades, he controlled the volume and frequency of trading in, and therefore exercised de facto control over, the customer’s account. LaScala’s short-term trading in the customer’s account resulted in $90,720 in trading costs and $116,194 in losses. The findings also stated that LaScala exercised discretionary authority to effect trades in the same customer’s account without having obtained prior written authorization from the customer or approval from his member firm to treat the account as discretionary.”
For a copy of the FINRA sanction, click here.
In addition, Joseph LaScala, Jr. has been the subject of five customer complaints, including the following:
- October 2012 — “FAILURE TO SUPERVISE REGISTERED REPRESENTATIVES JAMES RAPUANO/SEAN NESTO & FRANK LEE/JOHN JOHNSON. CLAIMANTS ALLEGE EXCESSIVE, UNSUITABLE TRADING BY RAPUANO/NESTO & LEE/JOHNSON BETWEEN FEBRUARY 2010 AND JULY 2011.” The customer dispute was settled for $30,000.
- August 2012 — “FAILURE TO SUPERVISE REGISTERED REPRESENTATIVE’S EXCESSIVE, UNSUITABLE RECOMMENDATIONS; CHURNING; IMPROPER SALES ACTIVITIES; OVERTRADING; IMPERMISSIBLE PROCEEDS SALES; EXCESSIVE POSITION CONCENTRATION; AND MUTUAL FUND SWITCHING.” The customer dispute was settled for $6,250.
- May 2012 — “THIS CASE WAS ORIGINALLY FILED ON 9/16/10 AGAINST ORIGINAL RESPONDENTS CLAIMING MISHANDLING OF ACCOUNT BY THE REP JAMES RAPUANO AND FAILURE TO SUPERVISE BY THE ASSIGNED BRANCH MANAGER. THE CASE WAS THEN AMENDED IN 5/2012 TO ADD ME AS AN ADDITIONAL RESPONDENT IN ANOTHER FAILURE TO SUPERVISE CLAIM EVEN THOUGH I WAS NOT ASSIGNED AS A SUPERVISOR OF THIS ACCOUNT OR REP.” The customer dispute was settled for $7,500.
- October 2010 — “FAILURE TO SUPERVISE.” The customer dispute was settled for $275,000.
- January 2002 — “OVER-CONCENTRATION AND OTHER MISTAKES IN HANDLING OF ACCOUNT.” The customer dispute was denied.
For a copy of Joseph LaScala, Jr.’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.
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