Thomas Anthony Gallo of New York New York a stockbroker formerly registered with Corinthian Partners LLC has been fined $10,000.00 and suspended for two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made misrepresentations concerning promissory notes that had been sold by Gallo to two of the firm’s customers. Letter of Acceptance Waiver and Consent No. 2017053921601 (Jan. 17, 2019).
According to the AWC, from August of 2014 to October of 2014, two investors had been solicited by Gallo to each make $50,000.00 investments in a NGT Inc. convertible promissory notes offering. The AWC stated that Corinthian was the placement agent for the NGT private placement offering. Apparently, the private placement was intended to enable NGT to have the funds to finance its operations until the time it obtained financing in a public offering.
Evidently, the promissory notes contained a coupon ranging between twelve and fifteen percent. The AWC also revealed that 12,500 restricted common stock shares had been provided to the investors in connection with their promissory notes purchases. Apparently, the customers were able to convert their promissory notes into common stock. The AWC stated that Gallo was reportedly compensated as a result of two customers purchasing the NGT Inc. convertible promissory notes.
Evidently, at the time that NGT promissory notes had been positioned by Gallo to the customers, the issuer had serious financial issues. Notably, financial information contained within SEC filings indicated that the issuer had little working capital and had a history of incurring losses. Moreover, at least one public accountant communicated doubts about NGT staying in business unless it procured additional financing and capital.
The AWC stated that when Gallo advised customers to buy the convertible promissory notes, Gallo made false statements to them about NGT having arrangements in place for a firm commitment public offering which Gallo supposedly believed would produce the capital that NGT seemingly needed to stay afloat. Apparently, FINRA found the misrepresentation made by Gallo to be substantial given the fact that NGT’s interest payments on promissory notes, and NGT’s return of investors’ principal investment, depended on substantial capital being raised by NGT in the public offering if not for investors selling NGT stock they obtained as part of the private placement.
The AWC revealed that a public offering for NGT was eventually conducted on a best-efforts basis. Evidently, NGT was unable to accumulate the capital that it anticipated. As a result, the stock price of NGT fell, causing investors losses from the private placement. FINRA found Gallo to have acted in contravention of Securities Act of 1933 Section 17(a)(2) and 17(a)(3) because of his misrepresentations. Consequently, FINRA found Gallo’s conduct violative of FINRA Rule 2010.
FINRA Public Disclosure confirms that Gallo is referenced in four customer initiated investment related disputes containing allegations of his violative conduct during the time that he was associated with M.S. Farrell & Co., Inc., Kirlin Securities, Inc., D.H. Blair & Co., Inc., and Corinthian Partners, LLC. Specifically, Gallo was subject of a customer initiated investment related arbitration claim in which the customer was awarded $32,783.60 in damages based on Gallo being found liable on the customer’s claims that Gallo churned the customer’s account; negligently managed the transactions; breached a duty of good faith and fair dealing; breached a fiduciary duty that was owed to the customer; engaged in fraudulent activities; violated the terms of a contract; and effected stock and mutual fund transactions among other activities without proper supervision from M.S. Farrell & Co., Inc. FINRA Arbitration No. 01-02243 (Aug. 30, 2002).
Gallo was named in another customer initiated investment related arbitration claim where the customer was awarded $50,000.00 in damages found on Gallo and M.S. Farrell & Co., Inc. being found jointly liable on the customer’s claims of breach of fiduciary duty, misrepresentation of investment related information, breach of contract, and unsuitability in reference to Innapharma, Inc. units that had been purchased on the customer’s behalf by Gallo and the firm. FINRA Arbitration No. 04-03406 (Jan. 11, 2006). Three months later, on April 11, 2006, Gallo was suspended by National Association of Securities Dealers (NASD) based on accusations that he failed to pay the $50,000.00 award or otherwise confirm with FINRA that he complied with this obligation to honor the award. That suspension was not lifted by FINRA until September 17, 2008.
Moreover, on July 10, 2017, a customer filed an investment related complaint concerning Gallo’s activities in which the customer requested $35,000.00 in damages supported by allegations that while Gallo was employed by Corinthian Partners, LLC, private placement investment recommendations were not suitable for the customer; and misleading or misrepresented information had been provided to the customer concerning the private placement investments which ultimately induced the customer’s purchase.
Gallo’s registration with Corinthian Partners, LLC has been terminated as of May 28, 2015. Between June 2, 2015 and May 17, 2017, he was associated with Newbridge Securities Corporation, and from May 16, 2017 to April 10, 2018, Gallo was associated with Spartan Capital Securities, LLC.
