Nicholas Michael Caruso of Red Bank, New Jersey, a stockbroker formerly registered with Monmouth Capital Management LLC, has been suspended for three months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity because Caruso engaged in excessive trading during the time that he was associated with Monmouth Capital Management LLC. Letter of Acceptance, Waiver, and Consent No. 2022076459305 (October 12, 2023).
According to the AWC, Caruso recommended an excessive series of transactions for Customers A and B. This was inappropriate given the investment profiles of the customers, who were in their early sixties with incomes between $100,000.00 and $200,000.00 and a liquid net worth ranging from $200,000.00 to $500,000.00. Caruso’s strategy for these customers involved short-term trading without adequately considering the costs associated with frequent trading.
For Customer A, between November of 2022 and May of 2023, Caruso executed 20 transactions, resulting in a cost-to-equity ratio exceeding 49 percent in the customer’s account. This ratio showed that the customer’s account needed to grow by more than 49 percent in a seven-month period just to break even with the costs incurred. During this period, Customer A’s account contained purchases of approximately $146,000.00 in securities, resulting in a loss of about $4,500.00 and over $7,300.00 in trade costs and commissions.
Similarly, for Customer B, between September of 2022 and May of 2023, Caruso executed 22 transactions, leading to a cost-to-equity ratio exceeding 30 percent and a turnover rate of 6.56. Even though Customer B’s average account balance was approximately $22,200.00, Caruso conducted purchases amounting to about $145,800.00 in securities. This resulted in a loss of approximately $15,800.00 for the customer, with more than $6,800.00 paid in trade costs and commissions.
Caruso violated FINRA Rule 2010 and Exchange Act Rule 15a-1.
Caruso was associated with Alexander Capital L.P. in Red Bank, New Jersey from June 5, 2023, to August 17, 2023. Prior to this, Caruso had been associated with Monmouth Capital Management LLC in Point Pleasant Beach, New Jersey from May 20, 2022, until June 5, 2023. FINRA expelled Monmouth Capital Management LLC on July 6, 2023.
