Philip Marchese of New York, New York, a stockbroker formerly registered with Spartan Capital Securities LLC, has been suspended for twelve months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that Marchese made unsuitable recommendations to a customer when Marchese was employed by Spartan Capital. Letter of Acceptance, Waiver, and Consent No. 2018056490301 (April 22, 2022).
According to the AWC, between September 2017 and November 2019, Marchese made excessive trades in customer accounts, which FINRA described as quantitatively unsuitable. The AWC states that high-frequency trades were recommended by Marchese for four of his customers, and those customers went along with his recommendations.
FINRA states that between August 2017 and November 2019, 148 transactions were effected in Customer A’s account because of Marchese. This resulted in the customer’s account having a cost-to-equity ratio of 62 percent and an annualized turnover rate of 18.9. The AWC states that the customer experienced $143,237.000 in trading costs and $159,460.00 in losses.
Between October 2018 and October 2019, 17 transactions were executed in Customer B’s account through Marchese. He caused the customer’s account to have a cost-to-equity ratio of 42 percent and an annualized turnover rate of 6.76. The customer had to pay $4,607.00 in trading costs, and they sustained $23,202.00 in losses because of Marchese.
The regulator indicates that 87 trades were made in Customer C’s account by Marchese between September 2017 and March 2019. The customer’s account had a cost-to-equity ratio of 161 percent and an annualized turnover rate of 31.87. Customer C paid $66,335.00 in trading costs and realized $22,508.00 in losses.
FINRA shows that 44 trades were made by Marchese in Customer D’s account between April 2018 and September 2019, resulting in a cost-to-equity ratio of 196 percent and an annualized turnover rate of 37.23. The customer experienced $41,157.00 in losses after incurring $30,466.00 in trading costs.
The AWC states that Marchese made unsuitable and excessive trades based on the investors’ suitability profiles. Marchese caused the customers to pay high commissions and costs, and they realized a collective $246,327.00 in losses. The regulator found that Marchese violated FINRA Rules 2010 and 2111.
FINRA Public Disclosure shows that on December 22, 2016, a customer initiated investment related FINRA securities arbitration claim concerning Marchese’s activities was resolved for $50,000.00 in damages supported by accusations of unsuitable transactions, breach of contract, misrepresentation, violation of Minnesota Securities Act, and violation of FINRA Rules 2020 and 2010 in regard to stock and over-the-counter equities transactions executed by Marchese while he was associated with Legend Securities Inc. and National Securities Corporation. FINRA Arbitration No. 15-01543.
Marchese’s registration with Spartan Capital Securities was terminated on March 30, 2022.
