Mario Divita of Flushing, New York, a stockbroker associated with Traderfield Securities Inc., has been fined $75,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any principal capacity because Divita failed to adequately supervise registered representatives’ proposed outside business activities. Letter of Acceptance, Waiver, and Consent No. 2019062264901 (September 5, 2023).
According to the AWC, Divita and Traderfield Securities Inc. failed to establish, maintain, and enforce a supervisory system, which includes written supervisory procedures, aimed at ensuring compliance with rules governing registered representatives’ proposed outside business activities. Specifically, Divita and the firm were aware that two of their representatives were involved in activities related to investment funds and private placement offerings. These representatives managed investment funds that collected $60,000,000.00 from more than 200 individual investors. Despite this, neither Divita nor the firm evaluated these activities to determine if they were outside securities activities, which would require them to be recorded on the firm’s books and records.
Moreover, the representatives discussed and emailed about these investment funds as outside business activities to both Divita and the securities broker dealer, leading them to understand that these activities were investment related. Despite this understanding, neither Divita nor anyone else at the firm took the necessary steps to assess whether these activities should be restricted or prohibited. There was also no consideration on whether these activities would interfere with the responsibilities the representatives had towards the firm or its customers, or if they should be seen as part of the firm’s regular business operations.
Therefore, FINRA found that Divita violated FINRA Rules 2010, 3270.01, and 3110.
FINRA Public Disclosure also shows that on November 24, 2021, Divita was fined $5,000.00 and suspended as a principal for three months by FINRA because Divita failed to properly supervise a registered representative under his authority. This oversight led to excessive trading in customer accounts. Letter of Acceptance, Waiver, and Consent No. 2018059045003.
According to the AWC, the firm’s written supervisory procedures did not designate a supervisor to oversee the broker in question, and no supervisor was reviewing the broker’s trading activity for excessive trading until Divita took on the role. Despite being aware that the broker’s customers were responsible for a large volume of trades, Divita failed to properly monitor for signs of excessive trading. He primarily focused on trading volume and failed to recognize other red flags, such as the broker’s high commissions and significant losses in customer accounts.
FINRA indicated that Divita did not consider or understand key metrics like turnover rates and cost-to-equity ratios, which were intended to assess cost-effectiveness of trading activity. His failure to do so allowed the broker’s excessive trading to continue, causing customers to incur $451,057.00 in commissions and a total of $538,057.00 in losses.
FINRA Public Disclosure shows that Divita was referenced in three customer initiated investment related disputes concerning Divita’s conduct while associated with securities broker dealers. On February 22, 2021, a customer initiated investment related FINRA securities arbitration claim involving Divita’s conduct was settled for $24,500.00 in damages based upon allegations that Divita made misrepresentations of material fact in connection with the sale of common and preferred stocks and over-the-counter equities and when Divita was associated with Traderfield Securities Inc. FINRA Arbitration No. 19-01849.
Divita was also referenced in a customer initiated investment related FINRA securities arbitration claim that was settled for $40,000.00 in damages on August 15, 2020. The allegations focused on fraudulent misrepresentations between December 2016 and March 2018, in connection with the sale of stocks and equities when Divita was associated with Traderfield Securities Inc. FINRA Arbitration No. 19-02560 (August 30, 2019).
Moreover, Divita is identified in another customer initiated investment related claim that was settled for $8,000.00 in damages on April 12, 2022. The customer alleged being overcharged in commissions in connection with the sale of over-the-counter equities when Divita was associated with Traderfield Securities Inc. FINRA Arbitration No. 21-00960 (April 30, 2021).
Divita has been associated with Traderfield Securities Inc. in Flushing, New York since October 13, 2016.
