Jesse D. Krapf, of New York, New York, a stockbroker registered with Spartan Capital Securities LLC, has been suspended for five months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Krapf violated the Best Interest Obligation under Rule 15l-1 of the Securities Exchange Act of 1934 (Regulation BI) by engaging in excessive trading in a customer’s account. Letter of Acceptance, Waiver, and Consent No. 2018056490319 (October 30, 2024).
According to the AWC, between October 2019 and April 2022, Krapf engaged in unsuitable trading in a senior customer’s account. The customer, a business owner, relied on Krapf’s advice and routinely followed his recommendations, granting Krapf control over the account. Despite this, Krapf recommended in-and-out trading even when there was no significant change in the price of the recommended securities.
The regulator noted instances of excessive trading, including an April 2020 transaction where Krapf advised the customer to purchase nearly $180,000.00 in stock of a biotechnology company and then sell the position two days later, generating $7,800.00 in commissions. In another instance, Krapf recommended buying $82,000.00 in a semiconductor company and selling the position the same day for a loss while charging $2,000.00 in commissions.
As a result of Krapf’s trading, the customer’s account experienced an annualized turnover rate of 23 and an annualized cost-to-equity ratio of 104 percent. Krapf’s trading generated total costs of $96,496.00, including $92,847.00 in commissions, and caused the customer to suffer $41,017.00 in total realized losses.
FINRA determined that Krapf’s actions violated Regulation BI, FINRA Rule 2111, and FINRA Rule 2010. Consequently, Krapf consented to a five-month suspension. The suspension began on November 18, 2024, and will end on April 17, 2025.
FINRA Public Disclosure shows that Krapf was also referenced in a customer initiated investment related FINRA securities arbitration claim that was settled for $165,000.00 in damages based upon allegations that Krapf was negligent and breached his fiduciary duties in connection with the sale of stocks during the time that Krapf was associated with Newbridge Securities Corporation. FINRA Arbitration No. 18-03480 (October 29, 2019).
Krapf was associated with Spartan Capital Securities LLC in New York, New York, from October 22, 2019, to December 4, 2024. He was associated with Benchmark Investments Inc. in New York, New York, from February 23, 2019, to October 29, 2019, and was associated with Newbridge Securities Corporation in New York, New York, from February 12, 2016, to February 21, 2019.
