Jason Paul Collichio of Garden City New York a stockbroker currently registered with Worden Capital Management LLC has been fined $5,000.00 and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in A PRINCIPAL capacity based upon findings that he did not supervise Worden Capital Management stockbrokers who excessively traded and churned customer accounts. Letter of Acceptance Waiver and Consent No. 2017056432602 (Dec. 31, 2020).
According to the AWC, between January of 2015 and August of 2017, Collichio was a branch manager for Worden Capital Management. He was supposed to supervise all of his stockbrokers’ trading activities. This included two stockbrokers who owned the branch that Collichio managed. Collichio knew about red flags pertaining to those two stockbrokers which included that they were on heightened supervision because of each of them accruing at least three customer initiated investment related complaints containing accusations of sales practice violations against them.
The AWC also indicated that the trading activities of the two stockbrokers was supposed to be reviewed by Collichio each day for potential suitability or commission issues. Collichio was provided a review log which contained cost-to-equity ratios in customer accounts. This log showed that there were high cost-to-equity ratios in accounts because of the two stockbrokers.
Another part of Collichio’s duties included the review of monthly emails that contained information housed in Worden Capital Management’s account review logs. These emails identified that customer accounts contained high cost-to-equity ratios, turnover rates, and large losses. This information reflected that trades were made in customers’ accounts on an excessive basis.
In one case, a November 2016 monthly report showed that the two stockbrokers were responsible for 17 customer accounts which contained high turnover rates and cost-to-equity ratios.
The heightened supervision plan which was applicable for the two stockbrokers called for Collichio to review transactions with customers. The regulator pointed out that Collichio contacted five customers for each of the two stockbrokers. In each case, Collichio only confirmed that the customer was being provided with account statements and confirmations regarding the trades that were executed in their accounts because of the stockbrokers. There was no point in which Collichio determined whether trades were suitable.
The regulator indicated that customers of those stockbrokers were solicited to invest on a speculative basis and to subscribe to short-term trading strategies. From December of 2014 to December of 2017, seven customers’ accounts had been excessively traded and churned by the first stockbroker which produced $529,056.00 in total commissions while causing customers to sustain $1,834,834.00 in realized losses. From January of 2015 to December of 2017, accounts of four different customers had been excessively traded and churned by the second stockbroker. This led those customers to experience $1,170,635.00 in realized losses while leading that stockbroker to take in commissions of $940,705.00.
The AWC stated that the stockbrokers were unreasonably supervised by Collichio. He was aware of the unsuitable acting trading initiated by them and that customer accounts were churned. FINRA indicated that those stockbrokers were not restricted or reprimanded by Collichio in light of their problematic sales practices. FINRA determined that Collichio’s supervisory failures constituted violations of FINRA Rules 2010 and 3110. The AWC, signed by Collichio also provides that he “may not take any action or make or permit to be made any public statement, including in regulatory filings or otherwise, denying, directly or indirectly, any finding in this AWC or create the impression that the AWC is without factual basis.”
Collichio has been registered with Worden Capital Management since March 23, 2009.
