John Sebastion Cangialosi Jr of New York New York a stockbroker formerly registered with Worden Capital Management has been fined $7,500.00 and suspended for nine months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that Cangialosi engaged in excessive trading of customer accounts at Worden Capital Management and Legend Securities. Letter of Acceptance Waiver and Consent No. 2017056432605 (Aug. 12, 2021).
According to the AWC, between October of 2014 and December of 2018, quantitatively unsuitable trades had been made by Cangialosi. High volume trades were advised by Cangialosi for three of his customers’ accounts. Those customers were told to hold a large amount of their money in a couple securities over a short period. FINRA also determined that Cangialosi controlled their accounts.
The AWC stated that in one investor’s case, between January of 2016 to December of 2018, 83 trades were made by Cangialosi in their account which resulted in that account having an annualized cost-to-equity ratio of 95.74 percent and an annualized turnover rate of 20.23. FINRA noted that $116,442.00 between margin interest and commissions had been paid by the customer but they realized $93,834.00 in losses.
FINRA stated that in another investor’s case, between March of 2017 and October 2017, 15 trades were made by Cangialosi in their account resulting in the account having an annualized cost-to-equity ratio of 39.21 percent and an annualized turnover rate of 8.43. The customer experienced $31,618.00 in realized losses after having to pay $21,450.00 in commissions and margin interests.
In the third investor’s case, between October of 2014 and October of 2016, 90 trades were made by Cangialosi which led the customer to suffer from $173,337.00 in trading costs and $279,803.00 in realized losses. The customer’s account had an annualized cost-to-equity ratio of 58.38 percent and annualized turnover rate of 13.7.
FINRA determined that Cangialosi made unsuitable and excessive trades in all of these investor accounts. He violated FINRA Rules 2010 and 2111.
Cangialosi has been sanctioned twice before. He was fined $5,000.00 and suspended by FINRA for three months supported by findings of Cangialosi failing to comply with FINRA and NASD rules on public disclosures. He was also issued a Stipulation and Order for Withdrawal by Michigan Corporations Securities and Commercial Licensing Bureau in which Cangialosi withdrew his securities agent and investment adviser representative registrations in the state based on accusations of him engaging in unethical and dishonest business practices.
Cangialosi has been identified in seven customer initiated investment related disputes regarding allegations of his harmful actions while employed by Legend Securities Inc., Brookstone Securities Inc., and JP Turner Company LLC. On January 14, 2016, a customer initiated investment related FINRA securities arbitration claim regarding Cangialosi’s activities was settled for $50,000.00 in damages founded on accusations of breach of fiduciary duty and fraud. FINRA Arbitration No. 15-00292.
Cangialosi is referenced in another customer initiated investment related FINRA securities arbitration claim which was resolved for $9,999.00 in damages supported by allegations that transactions effected in the customer’s account were not suitable for them and that Cangialosi negligently misrepresented information to them concerning stock and over-the-counter equities. FINRA Arbitration No. 15-03051 (May 26, 2016). The claim alleges that the customer’s account was churned and that Brookstone Securities breached a contract requirement with them. According to the claim, this customer fell victim to fraud.
On November 24, 2018, a different customer initiated investment related FINRA securities arbitration claim concerning Cangialosi’s conduct was settled for $30,000.00 in damages based upon accusations of breach of contract and breach of fiduciary duty by Cangialosi at Legend Securities. FINRA Arbitration No. 17-03396. According to the claim, Cangialosi made unauthorized and unsuitable trades in the customer’s account.
Cangialosi’s registration with Worden Capital Management has been terminated as of December 10, 2019. He has been associated with SW Financial since December 10, 2019. Seven of the eight securities broker dealers with whom Cangialosi has been registered have been expelled by FINRA or are otherwise defunct. #cockroach