Joseph Michael Giordano (also known as Joe Giordano) of Melville, New York, a principal registered with Aegis Capital Corp. has been fined $10,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity for six months based upon allegations that Giordano failed to supervise. FINRA Enforcement (AWC) No. 2016051704306 (Nov. 8, 2021).
According to the AWC, from July 2014 through December 2018, during the time that he was associated with Aegis Capital Corp., Giordano failed to reasonably supervise six registered representatives at Aegis’s Melville, New York office. Despite being presented with red flags concerning potentially unsuitable and excessive trading in customer accounts, Giordano failed to act. As a result, 23 customer accounts were subject to excessive and unsuitable trading, causing high turnover rates and annualized cost-to-equity ratios. The customers also suffered more than $2.6 million in costs and total losses of $4 million. The traditional “churn and burn.”
Specifically, Giordano was responsible for reviewing the daily trade blotter but delegated it to another firm employee who was not trained, and his work was not substantively reviewed by Giordano. Because of Giordano’s failure to supervise, the generalized annual cost-to-equity ratio rates ranged from 21.3% to 164.6%, and the turnover rates ranged from 4.2 to 96.3. The trading done by the Aegis representatives also generated over 700 exception reports. These reports were designed to identify accounts with high turnover rates and annualized cost-to-equity ratios. Giordano never reviewed the reports, even though he had access to them. It is unclear however whether Giordano reviewed the broker’s commission production, or even received an override for supervising them. In any event, as a result, FINRA found, and Giordano agreed, that he violated FINRA Rules 2010 and 3110.
This is not the first time that Giordano has been the subject of a regulatory action concerning his conduct in the securities industry. FINRA Public Disclosure shows that Giordano has been fined $7,500.00 and suspended from associating with any FINRA member in any capacity for ten business days based upon allegations that Giordano failed to supervise. NASD Enforcement (AWC) No. 2005002464702 (Oct. 11, 2007).
Eight of the last ten securities broker-dealers with whom Giordano has been associated have been expelled by regulators or are otherwise defunct. Mr. Giordano is presently registered with Aegis Capital as General Securities Representative (GSR), General Securities Principal (GP), Corporate Securities Representative (CS), Registered Options Principal (OP), Investment Banking Representative (IB), Operations Professional (OS), and Investment Banking Principal (BP).
Mr. Giordano is also dually registered with another broker dealer, Acceptus Capital Corp. (“ACC”), where he serves as Chief Executive Officer, together with Steven Dubinsky, the Managing Member of Acceptus’ owner, JPDLAP Corp., and Cesar Ramos, Jr., as Chief Compliance Officer, whom are also dually registered with Aegis Capital Corp. (also coincidentally “ACC”), as Chief Compliance Officer.
In October 2021, Aegis was ordered by FINRA to pay fines and restitution of more than $2.7 million because “Aegis failed to establish, maintain and enforce a supervisory system reasonably designed to supervise actively traded accounts and excessive and unsuitable trading.” FINRA Enforcement (AWC) No. 2016051704305. (Oct. 21, 2021).
