Dominic Anthony Tropiano of Cleveland Ohio a stockbroker formerly registered with America Northcoast Securities Inc. has been barred by Securities and Exchange Commission (SEC) from being a stockbroker or investment adviser representative based on accusations that Tropiano effected unauthorized and unsuitable transactions in customer accounts causing customers to experience more than $1,000,000.00 in losses. SEC v. Dominic A. Tropiano Civil Action No. 1:20-cv-01911 (Sept. 11, 2020).
According to the Order, a judgement was obtained by SEC which permanently enjoined Tropiano from committing future violations of Securities and Exchange Act of 1934 Section 10(b) and Securities Act of 1933 Section 17(a). SEC v. Dominic Tropiano Civil Action No. 1:20-cv-01911 (Sept. 1, 2020).
SEC’s Complaint alleged that over 500 trades involving leveraged exchange traded funds were fraudulently executed by Tropiano in 40 customer accounts.
SEC stated that leveraged exchange traded funds are meant for experienced investors with active trading goals. They are not meant for investors with plans to hold the securities for more than one trading day. Customers who were allegedly advised by Tropiano to invest in leveraged exchange traded funds had long-term investment objectives and moderate risk tolerances. SEC contended that the alternative investments were held in customer accounts for long periods because of Tropiano.
According to the Complaint, trades were made by Tropiano without customers’ consent. Tropiano never received any pre-trade confirmation from customers before he effected transactions. Allegedly, fraudulent trades by Tropiano caused customers to experience over $1,000,000.00 in losses even though Tropiano obtained $115,000.00 in commissions and bonuses relating to his trading in their accounts. Tropiano was accused by SEC of securities fraud in violation of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5 and Securities Act of 1933 Section 17(a).
Tropiano has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that he recommended unsuitable non-traditional exchange traded fund trades in customer accounts. Letter of Acceptance Waiver and Consent No. 2016051098501 (May 9, 2019). According to the AWC, Tropiano did not comprehend the features, terms and risks of these investments and did not have an adequate basis to conclude that they were appropriate for customers. Tropiano violated FINRA Rules 2010 and 2111.
FINRA Public Disclosure states that Tropiano has been identified in eight customer initiated investment related disputes containing allegations of his misconduct while he was registered with Key investment Services and American Northcoast Securities. On January 23, 2017, a customer filed an investment related FINRA securities arbitration claim concerning Tropiano’s activities in which the customer requested $100,000.00 in damages based upon accusations of Tropiano’s unauthorized trading and negligence relating to leveraged ETFs. FINRA Arbitration No. 17-00156. The claim alleges unsuitable recommendations and the violation of FINRA Rules. According to the claim, American Northcoast Securities failed to supervise Tropiano.
Tropiano is also the subject of a customer initiated investment related FINRA securities arbitration claim where the customer sought $150,000.00 in damages based on allegations of breach of contract and breach of fiduciary duty on leveraged ETF trades that Tropiano made during the time that he was associated with America Northcoast Securities. FINRA Arbitration No. 17-01026 (Apr. 25, 2017). According to the claim, the customer sustained damages from unauthorized trading and the failure to supervise by America Northcoast Securities. The claim alleges the violation of FINRA rules and Ohio Securities Act.
On May 17, 2017, another customer filed an investment related FINRA securities arbitration claim regarding Tropiano’s conduct in which the customer requested $250,000.00 in damages founded on accusations of unauthorized and unsuitable trading of leveraged ETFs. FINRA Arbitration No. 17-01197. Allegations also include breach of fiduciary duty and the securities broker dealer’s failure to supervise Tropiano’s activities.