Previously Registered D.A. Davidson & Co. Broker Mark Delgadillo Suspended by FINRA After Allegations of Exercising Discretion Without Authorization
Mark Delgadillo (CRD#: 1436842) was previously registered as a Broker and is currently registered as an Investment Advisor. He worked as a broker at D.A. Davidson & Co. in Santa Barbara, CA. He entered the securities industry in 1986 and previously worked for Crowell Wheedon & Co.; Morgan Stanley Smith Barney; Citigroup Global Markets, Inc.; Pruco Securities Corporation; and Morgan Stanley DW, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March 2021, FINRA sanctioned Mark Delgadillo, assessing a civil and administrative penalty of $5,000 and suspending him from all capacities for a period of one month, beginning on April 5, 2021. The FINRA sanction states, “Without admitting or denying the findings, Delgadillo consented to the sanctions and to the entry of findings that he engaged in discretionary trading without written authorization. The findings stated that Delgadillo exercised discretionary power in customer accounts on at least 100 occasions under circumstances that did not qualify for an exception described in the member firm’s WSPs, and failed to obtain prior written authorization from the customers to exercise discretionary power in their accounts. Delgadillo also never obtained the firm’s approval to exercise discretionary power in the customers’ accounts.”
For a copy of the FINRA sanction, click here.
In addition, Mark Delgadillo has been the subject of two customer complaints, including the following:
● April 2020—”It was alleged that the Registered Rep was making trades without first contacting clients.” Mark Delgadillo was separated from D.A. Davidson & Co. and permitted to voluntarily resign.
● October 2010—”CLAIMANTS ALLEGE, INTER ALIA,THAT BEGINNING IN JULY 205 THE FINANCIAL ADVISOR FAILED TO INFORM THE CLAIMANTS OF THE TAX CONSEQUENCES AND THE FORFEITING OF THEIR MINIMUM DEATH BENEFITS AS A RESULT OF THE EARLY SURRENDER OF THEIR VARIABLE ANNUITIES. CLAIMANTS ALSO ALLEGE THAT THE FA’S RECOMMENDATION TO TRANSFER THEIR MONEY INTO TRAK ACCTS.WAS UNSUITABLE.” The customer dispute was settled for $150,000.
● September 2004—”CLIENT ALLEGES, INTER ALIA, THAT CERTAIN INVESTMENTS STARTING IN 2002 WERE INAPPROPRIATE. NO SPECIFIC DAMAGE AMOUNT WAS SPECIFIED BUT A GOOD FAITH ESTIMATE OF THE CLAIMED DAMAGES EXCEEDS $5#,000.00.” The customer dispute was settled.
For a copy of Mark Delgadillo’s FINRA BrokerCheck, click here.
FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.
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, other investments, financial situation and needs, and tax status; other factors to consider include the investor’s investment objectives, time horizon, liquidity needs, risk tolerance, and any other relevant details disclosed by the customer.
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