Joseph Palermo of Staten Island, New York, a stockbroker with Chelsea Financial Services, has been fined $50,000.00 and suspended for twelve months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity by consenting to findings that he made omissions and misrepresentations concerning outside investment accounts, and engaged in unapproved business activities. Letter of Acceptance, Waiver and Consent, No. 20150457534-01 (Nov. 29, 2017).
According to the AWC, Palermo and another party, AS, effected an agreement whereby an account would be opened in Palermo’s name at BD for investment purposes. Apparently, $50,000.00 was used to fund the account, where Palermo enabled AS to trade in Palermo’s account at BD. Evidently, the agreement between AS and Palermo called for the profits in the account to be split between them based upon the trades that AS placed in Palermo’s account at BD. The AWC stated that trades were continuously effected in the account between January of 2013 and February of 2015. Hundreds of stocks trades were reportedly placed in the account on a daily basis.
Palermo evidently failed to disclose the trading activities at BD to Chelsea upon commencing employment on October 22, 2014. FINRA stated that Palermo made omissions and misrepresentations to the firm in that regard; conduct violative of FINRA Rule 2010. FINRA also found that Palermo’s failure to disclose three accounts at outside institutions to be violative of NASD Rule 3050(c) and FINRA Rule 2010.
The AWC additionally stated that during the time that Palermo was associated with Chelsea, he was involved in a real estate rental business, where he assumed landlord duties and collected rents from tenants. However, Palermo never informed Chelsea about his outside activities; he omitted them from the firm’s 2014 compliance questionnaire. FINRA found Palermo’s conduct violative of FINRA Rules 2010 and 3270.
FINRA Public Disclosure confirms that on May 1, 2013, a customer filed an investment related written complaint involving Palermo’s conduct, in which the customer requested $70,000.00 in damages founded on allegations that Palermo made unsuitable investment recommendations to the customer concerning real estate investment trusts.
Palermo’s registration with Chelsea Financial Services has been terminated as of December 8, 2015.
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