- August 17, 2021
- SW Financial
John Cangialosi (CRD#: 3273830) is a registered Broker at SW Financial in New York, NY. He entered the securities industry in 2001 and previously worked for Worden Capital Management, LLC; Legend Securities, Inc.; Joseph Gunnar & Co., LLC; Brookstone Securities, Inc.; J.P. Turner & Company, LLC; Gunnallen Financial, Inc.; and Joseph Stevens & Company, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in August 2021, FINRA sanctioned John Cangialosi, levying a civil and administrative penalty/fine of $7,500, ordering restitution of $271,622, and suspending him from all capacities for a period of nine months beginning on September 7, 2021 and ending on June 6, 2022. The FINRA sanction states, “Without admitting or denying the findings, Cangialosi consented to the sanctions and to the entry of findings that he engaged in quantitatively unsuitable trading in three customer accounts. The findings stated that Cangialosi recommended high frequency trading in the accounts, with each customer often holding concentrated positions in one or two securities for short periods of time. Cangialosi’s customers routinely followed his recommendations and, as a result, he exercised de facto control over the accounts. Cangialosi’s trading also resulted in high turnover rates and cost-to-equity ratios as well as significant losses. Cangialosi’s trading in the customers’ accounts was excessive and unsuitable given the customers’ investment profiles. As a result, the customers suffered collective realized losses of $405,255, while paying total trading costs of $311,229, including commissions of $292,657.”
For a copy of the FINRA sanction, click here.
In addition, John Cangialosi has been the subject of seven customer complaints, including the following:
● September 2020–”FINRA Case #20170564326. On September 15, 2020, FINRA made a preliminary determination to recommend that disciplinary action be brought against John Cangialosi alleging Violation of FINRA Rules 2111 and 2010 in that Cangialosi recommended an unsuitable active trading strategy to customers. On March 12, 2021, FINRA made a further preliminary determination to recommend that disciplinary action be brought against Cangialosi alleging willful violation of Section 10(b) of the Exchange Act and Securities Exchange Act Rule 10b-5 and FINRA Rules 2020 and 2010 in that he churned customers’ accounts.” The investigation was initiated by FINRA.
● January 2018–”Churning/quantitative suitability; unsuitable investments; unauthorized trading; negligence; breach of fiduciary duty; and, breach of contract.” The customer dispute was settled for $30,000.
● January 2016–”The Administrator intends to DENY the SECURITIES AGENT REGISTRATION APPLICATION OF JOHN S. CANGIALOSI, under section 412(1) of the Act, MCL 451.2412(1), because Applicant engaged in dishonest and unethical practices within the last 10 years, which supports the denial of his registration application under the above-cited provisions of the Michigan Uniform Securities Act (2002), 2008 PA 551, MCL 451.2101 et seq.” Initiated by the state of Michigan, John Cangialosi’s registration application was withdrawn.
● November 2015–”Statement of Claim alleges: Fraudulent and Negligent Acts, Breach of Contractual Requirements, Churning, Unsuitability, and Negligent Misrepresentation.” The customer dispute was settled for $9,999.00.
● August 2015–”Customers Claims Representative overstated account value by $38000-$40000 and did not send check promptly.” The customer dispute was closed with no action.
● February 2015–”CUSTOMER, THROUGH COUNSEL, ALLEGES THAT “RESPONDENTS” BREACHED A CONTRACT, ENGAGED IN FRAUD, BREACHED THEIR FIDUCIARY DUTIES, AND WERE OTHERWISE NEGLIGENT RESULTING IN DAMAGES OF $250,000.” The customer dispute was settled for $50,000.
● December 2013–John Cangialosi’s bankruptcy was discharged.
● April 2013–”FINRA RULES 1122 AND 2010, NASD RULE 2110, AND INTERPRETIVE MATERIAL 1000-1: CANGIALOSI FAILED TO DISCLOSE, AND IN SOME INSTANCES TO TIMELY DISCLOSE ON HIS UNIFORM APPLICATION FOR SECURITIES INDUSTRY REGISTRATION OR TRANSFER (FORM U4) SIX UNSATISFIED JUDGMENTS AND/OR LIENS.” As a result of this regulatory action initiated by FINRA, John Cangialosi was sanctioned with a fine of $5,000 and a suspension from all capacities for three months beginning on May 20, 2013 and ending on August 19, 2013.
● August 2012–”IN MAY 2012 CANGIALOSI SOLICITED THE PURCHASE OF 5000 CYPRESS SEMI CONDUCTOR FROM [CUSTOMER]. IT WAS ALLEGED THAT THE TRADE WAS UNSUITABLE FOR A PURCHASE IN AN INDIVIDUAL ACCOUNT DUE TO THE FACT THE FUNDS WERE WITHDRAWN FROM HIS IRA ACCOUNT TO PAY FOR THE TRADE.” The customer dispute was closed with no action.
● November 2011–”[CUSTOMER] ALLEGES UNAUTHORIZED TRADES IN MPEL AND EXCESSIVE COMMISSION CHARGES.” The customer dispute was closed with no action.
● February 2009–”UNAUTHORIZED TRADING. SEE OCCURRENCE#1436280.” John Cangialosi was permitted to resign from J.P. Turner & Company, LLC.
● January 2009–”UNAUTHORIZED TRADES.” The customer dispute was settled for $67,832.50.
For a copy of John Cangialosi’s FINRA BrokerCheck, click here.
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.
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 email@example.com.