Jesse D. Krapf, a stockbroker formerly with Spartan Capital Securities LLC in New York, New York, was the subject of a Financial Industry Regulatory Authority (FINRA) regulatory action finalized on October 30, 2024. FINRA found that Krapf violated Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934, as well as FINRA Rules 2111 and 2010. FINRA found that Krapf engaged in excessive trading in a senior customer’s account, which was not in the customer’s best interest. Letter of Acceptance, Waiver, and Consent (AWC) No. 2018056490319.
Between October 2019 and April 2022, Krapf exercised significant control over the customer’s account, as the customer consistently followed his advice. Krapf recommended frequent in-and-out trades that generated substantial commissions while causing financial losses. For example, in April 2020, Krapf advised the purchase of nearly $180,000 in stock from a biotechnology company, which he sold two days later, resulting in $7,800 in commissions. The next day, he recommended the purchase and same-day sale of $82,000 in stock, generating $2,000 in commissions and further losses for the customer.
In total, Krapf executed 58 transactions in the customer’s account, leading to an annualized turnover rate of 23 and a cost-to-equity ratio of 104%. The trading activity generated total costs of $96,496, including $92,847 in commissions, and caused $41,017 in realized losses. FINRA determined that Krapf’s trading activity was excessive, unsuitable, and failed to satisfy the best interest requirements under Reg BI.
As a result, on November 18, 2024, FINRA suspended Krapf for five months, prohibiting him from associating with any FINRA member firm in all capacities. The suspension is scheduled to end on April 17, 2025.
Previously, on October 10, 2018, while registered with Newbridge Securities Corporation, Krapf was named in a customer-initiated complaint alleging negligence and breach of fiduciary duty involving equity products. The customer sought $500,000 in damages. The matter was resolved on October 29, 2019, with a settlement of $165,000 paid by the securities broker dealer, and Krapf did not contribute to the settlement.
Krapf was registered with Spartan Capital Securities LLC in New York, NY, from October 22, 2019, until December 4, 2024.
