Michael N. Guilfoyle, of New York, New York, a stockbroker registered with Legend Securities, Inc., has been fined $10,000.00 and suspended for ten months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he effected unsuitable transactions in the customer’s account. Letter of Acceptance, Waiver and Consent, No. 2015047602801 (Dec. 7, 2017).
According to the AWC, Guilfoyle assessed sales charges to customers through mark-downs, markups and commissions on transactions. Apparently, the customers’ sales charges had been stated within the confirmations of trades that customers received. Yet, when it came to mark-downs and mark-ups, which consisted of the majority of the sales charges imposed, the amount which customers paid was not made clear.
The AWC stated that a seventy-three-year-old customer, JC, established an account in October of 2014, wherein Guilfoyle controlled trading in the customer’s account. The AWC confirmed that the customer would follow Guilfoyle’s recommendations each time they were made. Evidently, from October 7, 2014 to April 28, 2016, a total of seventy-seven trades were effected in JC’s account, in which ninety percent of them had been solicited.
The AWC stated that JC’s account was subject of a 54.07 percent cost-to-equity ratio and 23.3 turnover rate. Apparently, trades were effected to benefit Guilfoyle even though the customer did not stand to gain any economic benefit. In particular, Guilfoyle made a recommendation for one-hundred and fifty shares of VLO to be purchased by JC on February 27, 2015. Evidently, the customer was assessed a $350.00 mark-up in the trade. JC’s shares were sold a month later; however, JC incurred a loss based upon the mark-up that Guilfoyle assessed. FINRA stated that Guilfoyle’s activities over an eighteen-month period led JC to sustain $27,821.22 in investment losses even though Guilfoyle accumulated $35,685.00 in sales charges.
The AWC revealed that another customer, JA, established an account in 2014 that Guilfoyle controlled trading in in. JA reportedly had under five years of experience investing in bonds and stocks. The AWC revealed that from October 27, 2014 to April 30, 2015, thirty-three trades had been effected in the customer’s account, ninety-three of which had been solicited by Guilfoyle.
The AWC stated that JA’s account was subject of a 23.71% cost-to-equity ratio and 5.9 turnover rate. Guilfoyle reportedly traded actively in JA’s account much like with customer JC. In one circumstance, on January 7, 2015, JA was advised to buy 1,250 shares of TASR, which had been marked up an additional $1,200.00 to account for the sales charge that Guilfoyle imposed. JA was then advised to sell the positions two weeks later. Yet, a $283.85 loss was incurred by JA as a result of having been assessed a $1,200.00 mark-up. The AWC stated that over a six-month period, $26,150.00 in sales charges had been assessed by Guilfoyle even though the customer sustained $28,047.83.
The AWC stated that Guilfoyle’s trading in JA’s and JC’s accounts was unsuitable and excessive based on having exposed those customers to high cost-to-equity ratios and turnover rates, as well as his accumulation of sales charges at his customers’ expenses. FINRA found that Guilfoyle’s conduct was violative of FINRA Rules 2010 and 2111.
FINRA Public Disclosure reveals that on February 19, 2010, a customer filed an investment related written complaint involving Guilfoyle’s conduct, in which the customer requested $299,817.48 in damages supported by accusations of unsuitability, misrepresentation, breach of fiduciary duty, fraud, unauthorized and excessive trading of over-the-counter equities in the customer’s account while Guilfoyle was associated with J.P. Turner & Company LLC.
Further, a customer initiated investment related arbitration claim involving Guilfoyle’s conduct was settled for $99,999.00 in damages based upon allegations that Guilfoyle, while associated at Legend Securities, Inc., effected unsuitable investment recommendations to the customer, churned the customer’s investment portfolio, and effected unauthorized over-the-counter equities in the customer’s account. FINRA Arbitration No. 14-03134 (Oct. 2, 2015).
Since September 27, 2006, Guilfoyle has been associated with twelve different broker dealers, three of whom are defunct or have been expelled by securities regulators for violation of federal securities laws.
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