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Former Seton Securities Group Financial Advisor Michael Conte Barred by FINRA After Failing to Testify About Unsuitability Allegations

Michael Conte (CRD#: 2646071) is a previously registered Broker and previously registered Investment Advisor. He entered the securities industry in 1996 and previously worked for Seton Securities Group, Inc.; Fusion Analytics Securities, LLC; Redwood Brokerage, LLC; Citigroup Global Markets, Inc.;  Morgan Stanley DW Inc.; Cowen & Co.; Creative Capital Management Corp.; Securities & Investment Planning Co.; and Locust Street Securities, Inc.

 

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in October 2021, FINRA sanctioned Michael Conte, barring him from all capacities indefinitely beginning October 18, 2021. The FINRA sanction states, “Without admitting or denying the findings, Conte consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation into potential misrepresentations made in the participation in and supervision of the sale of multiple private offerings of bonds.”

 

For a copy of the FINRA sanction, click here.

 

In addition, Michael Conte has been the subject of four customer complaints, including the following:

 

  • August 2021–”The Securities and Exchange Commission (the “Commission”), for its Complaint against Conte, alleges that the Commission brings this action to enjoin further violations of the federal securities laws by, and obtain disgorgement and civil penalties from, defendants Fusion Analytics Investment Partners, LLC (“FAIP”), Fusion Analytics Holdings, LLC (“Fusion Holdings”), and Michael J. Conte (“Conte,” and, with FAIP and Fusion Holdings, “Defendants”). From 2010 to 2016, Defendants raised approximately $1.4 million through the offer and sale of promissory notes (“Notes’ ‘) to 10 individual retail investors and advisory clients, most of whom were retired and elderly, without disclosing material facts regarding FAIP’s declining financial condition. Instead, Defendants made material misrepresentations regarding FAIP’s profitability and the safety and soundness of the Notes. Defendants were unable to repay investors their principal at the time of the Notes’ maturity due to FAIP’s worsening financial condition. Between 2013 and 2018, Defendants succeeded in renegotiating the material terms and reissuing six of the Notes, totaling approximately $850,000, still without disclosing to investors FAIP’s continuing financial decline. Ultimately, Defendants defaulted on the majority of the Notes. Defendants have repaid certain investors all or part of the outstanding principal and interest related to their Notes. To date, Defendants have failed to repay two Notes totaling $246,000 in principal. By engaging in this conduct, Defendants violated Section 17(a) of the Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”), and Exchange Act Rule 10b-5; and FAIP and Conte additionally violated Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”).” The pending civil action was initiated by the U.S. Securities & Exchange Commission.
  • November 2016–A civil judgment/lien was levied against Michael Conte in the amount of $565,225.
  • July 2016–”1) Violations of the Pennsylvania Securities Act, 70 P.S. ##1-101 et seq, 2) breach of fiduciary duty against all respondents arising out of the sale to claimants of investments in a private offering in a promissory note, 3) negligence against Fusion Analytics Securities and [Third Party].” Damages of $100,000 were awarded. For a copy of the arbitration details, click here.
  • September 2005–”UNSUITABILITY, MISREPRESENTATION, OMISSION TO STATE MATERIAL FACTS, BREACH OF FIDUCIARY DUTY, UNAUTHORIZED TRADING, VIOLATION OF NASD AND NYSE RULES,BREACH OF AGREEMENT, NEGLIGENCE, FRAUD, VIOLATION OF 1934 SECURITIES EXCHANGE ACT AND RULE 10B-5 10/9/03-10/30/2005.” The customer dispute was settled for $28,000.
  • July 2004–”CUSTOMER ALLEGE IN A STATEMENT OF CLAIM THAT THEY APPROX $406000.00 FROM MORGAN STANLEY ACCOUNT AS A RESULT OF MISREPRESENTATION AND UNSUITABLE INVESTMENT ADVISE OF THE PART OF FORMER MORGAN STANLEY FINANCIAL ADVISOR MICHAEL CONTE. WE DENY THE CUSTOMERS’ ALLEGATIONS AND DARE IN THE PROCESS OF PREPARING AN ANSWER TO THE STATEMENT OF CLAIM.” The customer dispute was settled for $105,000.
  • June 2002–”CUSTOMER ALLEGES THAT FINANCIAL ADVISOR MISREPRESENTED A BOND SHE PURCHASED ON HIS ADVICE IN AUGUST 2001.” The customer dispute was denied.

 

For a copy of Michael Conte’s FINRA BrokerCheck, click here.

 

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 agee, 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.

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