Michael Ciro Colletti of Melville New York is a stockbroker formerly registered with National Securities Corporation who has been fined seven thousand five-hundred dollars and suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to an Order Accepting Offer of Settlement containing findings that Colletti failed to supervise Colletti’s cold calling staff members who conceivably misrepresented investment information to customers. Department of Enforcement v. Michael Ciro Colletti Disciplinary Proceeding No. 2014042520501 (Jan. 29 2018).
According to the Order, from May of 2014 to October of 2014, cold callers in Colletti’s branch were not supervised. Apparently, the firm’s written supervisory procedures stated that Colletti, as the branch’s designated principal, was tasked with ensuring that cold callers’ activities were monitored. Further, the firm’s written supervisory procedures contained restrictions on the use of sales scripts by cold callers; the materials or scripts were required to be approved by the firm’s supervisory staff beforehand. The cold callers were further prohibited from engaging in conversation about investment services or products, soliciting customers for purposes of opening any accounts, or determining the prospective customers’ qualifications relating to their objectives for investing, accredited status or financial circumstances.
Apparently, the cold callers were only able to ask the prospective customers about attending events sponsored by the firm, determine if they wished to discuss matters with one of the firm’s registered representatives, or determine if they wished to receive further information about the firm and details about services that the firm provided. Colletti reportedly understood the firm’s restrictions on cold callers he supervised and confirmed that he was following the firm’s compliance alerts and written supervisory procedures.
Evidently, cold callers were paid by Colletti and one his fellow branch stockbrokers, AR. Evidently, nine cold callers had been hired, but no paperwork relating to their hiring had been provided by Colletti to his firm until five months after Colletti commenced his work at the firm’s Melville branch. Colletti also reportedly failed to disclose the information about those cold callers until his branch was under an examination by FINRA, wherein he was informed by FINRA of his obligations to notify the firm.
Apparently, the cold callers relied upon their scripts in conducting phone calls, but those scripts were not authorized by the firm. Evidently, the cold callers asked questions about the prospective customers’ market positions and discussed products that were not permitted to be discussed according to the firm’s supervisory procedures. For example, prospective customers were told that a reputable investment bank would be conducting an initial public offering.
The cold callers also misrepresented National Securities Corporation by claiming that it was Fidelity Investment’s former trading division. Moreover, the cold callers evidently pursued activities to accumulate money and open accounts, which was prohibited by the firm’s supervisory procedures. The AWC further stated that the cold callers utilized sales scripts that FINRA concluded were unauthorized, which contained questions that were not appropriate for prospective customers and possible misrepresentations relating to investment opportunities. Colletti’s failure to supervise the firm’s cold callers in that regard was found by FINRA to be violative of FINRA Rules 2010 and 2010.
On October 22, 2014, Colletti was fired by National Securities Corp based upon accusations that he engaged in outside business activities without ever having notified the firm. Colletti was later employed with Securities America, Inc. but was terminated based on the firm’s allegations that he failed to disclose that he had been terminated from National Securities Corp founded on accusations of his improper conduct. Colletti has been associated with The Investment Center, Inc. since January 11, 2017.
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