Douglas Anthony Leone of Melville New York a stockbroker formerly registered with Salomon Whitney Financial and Newport Coast Securities has been fined $185,000.00 and barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to a Securities and Exchange Commission Opinion in which SEC affirmed a FINRA National Adjudicatory Council’s findings and sanctions against Leone for making unsuitable recommendations to customers and churning their accounts. In the Matter of the Application of Newport Coast Securities Inc. For Review of Disciplinary Action Taken by FINRA Admin. Proc. File No. 3-18555 (Apr. 3, 2020).
The Opinion noted that Leone controlled 21 accounts at Newport Coast Securities. He had customers’ accounts set up to be traded on margin and to have investments traded daily even though customers were not supportive of Leone’s methods. SEC contends that Leone caused customers’ accounts to contain annualized cost-to-equity ratios exceeding 50 percent. The regulator also found that Leone made unauthorized trades.
SEC additionally stated that with at least eight customer accounts, Leone’s main agenda was to generate commissions without any regard for the interests of his customers. Those customers required in excess of 100 percent annual returns to break even through Leone’s trading. He hid from customers that his commissions were between $1,000.00 and $5,000.00 for each trade. He churned the customers’ accounts in violation of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, and FINRA Rules 2010 and 2020.
FINRA Public Disclosure shows that Leone has been sanctioned four times. He was barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon a Default Decision containing findings that he refused to comply with FINRA during the period that he was investigated for alleged excessive trading and unsuitable recommendations. Department of Enforcement v. Douglas A. Leone Disciplinary Proceeding No. 2016052560002 (Apr. 23, 2018). Leone violated FINRA Rules 2010 and 8210 for refusing to testify about his trading.
Leone was most recently sanctioned by Financial Industry Regulatory Authority (FINRA) founded on accusations that Leone failed to comply with a settlement agreement or arbitration award. Case No. 18-01055 (Mar. 31, 2020).
Leone has been identified in nine customer initiated investment related disputes regarding allegations of his misconduct while employed by securities broker dealers including Newport Coast Securities and SW Financial. FINRA Public Disclosure shows that a customer initiated investment related FINRA securities arbitration claim regarding Leone’s conduct was resolved for $9,999.00 in damages based upon accusations that Leone breached a fiduciary duty to the customer in reference to stock trades at Newport Coast Securities. The claim alleges that misrepresentations were made about the transactions and that the customer’s account had been churned by Leone.
Another customer initiated investment related FINRA securities arbitration claim concerning Leone’s activities was settled for $70,000.00 in damages supported by allegations of breach of fiduciary duty and breach of contract in regard to stock trading by Leone at Newport Coast Securities.
Leone is also the subject of a customer initiated investment related FINRA securities arbitration claim which was resolved for $22,623.00 in damages founded on accusations that Leone executed unauthorized and unsuitable trades in the customer’s account while Leone was associated with Salomon Whitney Financial (SW Financial). FINRA Arbitration No. 18-01055 (Apr. 3, 2018). The claim alleges that the customer’s account was churned and that there was negligence and a breach of contract by Leone concerning stock trades.
On April 23, 2019, a different customer filed an investment related FINRA securities arbitration claim involving Leone’s conduct where the customer sought $250,000.00 in damages based on allegations of gross negligence and churning of the customer’s investment account at SW Financial. FINRA Arbitration No. 19-01103. According to the claim, misleading statements were made by Leone regarding investment risks. The claim alleges that Leone excessively traded by using margin.
Leone’s registration with Salomon Whitney Financial was terminated on March 22, 2017.
