Carmine Claudio Capone of Boca Raton Florida a stockbroker and supervisor currently registered with The GMS Group LLC is referenced in a customer initiated investment related arbitration claim where the customer sought $1,000,000.00 in damages founded on accusations that Capone failed to supervise a stockbroker who (1) made investment recommendations that failed to be suitable (2) violated a fiduciary duty to the customer (3) negligently arranged or handled investment transactions and (4) made misrepresentations about municipal debt investments selected for the customer’s account when the stockbroker was employed by The GMS Group LLC. Financial Industry Regulatory Authority (FINRA) Arbitration No. 18-02748 (Aug. 3, 2018).
FINRA Public Disclosure reveals that Capone is referenced in two additional customer initiated investment related disputes which pertain to allegations of his violative conduct during the period in which he was associated with The GMS Group. In particular, a customer initiated investment related arbitration claim regarding Capone’s conduct was resolved for $675,000.00 in damages based upon accusations that all of the municipal and corporate trades placed in the customer’s account had been unauthorized; and the account was allocated in unsuitable investments given the customer’s tolerance for risk and objectives for investing.
Another customer initiated investment related arbitration claim involving Capone’s activities was settled for $350,000.00 in damages supported by allegations that the customer’s account was inadequately supervised resulting in bad exchange traded fund and municipal debt trades being effected in the customer’s account producing unwarranted losses. FINRA Arbitration No. 15-03075 (Nov. 15, 2016).
Capone has also been fined $10,000.00 and suspended from associating with any FINRA member in any capacity founded on findings that as supervisor of GMS Group, Capone failed to monitor a stockbroker’s sales practices which resulted in unauthorized transactions being executed in customer accounts and unsuitable non-traditional exchange traded funds being recommended for four GMS Group customer accounts. Letter of Acceptance Waiver and Consent No. 2013038756502 (Oct. 20, 2015).
Evidently, there was no reasonable supervisory system implemented by the firm capable of adequately monitoring any of the securities broker dealer’s stockbroker’s recommendations of non-traditional exchange traded funds. The AWC stated that there was no training provided to the stockbroker by GMS Group concerning those alternative investments. Capone reportedly permitted one hundred seventy-three of those non-traditional exchange traded funds to be executed by the stockbroker even though he lacked an adequate foundation to conclude that the transactions were appropriate.
FINRA found that those trades effected by the GMS stockbroker failed to be suitable for the customer. Indications of the stockbrokers’ unsuitable recommendations and trading had been made known to Capone; however, he failed to meaningfully discuss the stockbroker’s trading with the customers to ensure that the transactions were suitable and that customers understood the risks of trading implemented in their accounts. FINRA found Capone’s conduct violative of FINRA Rule 2010 and National Association of Securities Dealers (NASD) Rule 3010(a) and 3010(b).
Capone has been registered with The GMS Group LLC since November 29, 1988.
