Securities Arbitration Lawyer Blog
The Financial Industry Regulatory Authority (“FINRA”) has suspended stockbroker Leonard Marzocco from the securities industry. Mr. Marzocco consented to the suspension after FINRA alleged that between June 2019 and December 2019, while associated with Woodstock Financial Group, Inc. (“Woodstock Financial Group”), Mr. Marzocco excessively and unsuitable traded a customer’s account, in violation of FINRA Rules 2111 and 2010. As part of the agreement, Mr. Marzocco also agreed to pay $27,078 in restitution and a fine of $5,000.
Mr. Marzocco was registered as a broker with Woodstock Financial Group, Inc. in Nesconset, New York, from June 2019 to December 2019. Prior to joining Woodstock Financial Group, Mr. Marzocco was a registered stockbroker with First Standard Financial Company LLC in Miller Place, New York, from June 2017 to June 2019.
This is the second time Mr. Marzocco has been suspended for excessive trading. In July 2020, Mr. Marzocco contended to an 11-month suspension after FINRA alleged that he engaged in quantitatively unsuitable trading in a customer’s account. The findings stated that Marzocco’s trading of the accounts resulted in high turnover rates and cost-to-equity ratios, as well as significant losses. The customers suffered collective losses of $196,331 and paid $81,523 in commissions and fees. Marzocco also recommended a significant number of trades using margin in the customer accounts. In particular, Marzocco recommended using margin to a customer, even though he was aware that the customer’s financial circumstances made it unsuitable for him.
Iorio Altamirano LLP is investigating potential legal claims on behalf of customers of Len Marzocco, Woodstock Financial Group, and First Standard Financial Company LLC related to investment recommendations and account activity made by Mr. Lenny Marzocco.
Customers who have suffered investment losses or suspect other misconduct by Mr. Marzocco, Woodstock Financial Group, or First Standard Financial Company LLC in their investment, brokerage, or retirement accounts, should contact securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and to review their legal rights.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Woodstock Financial Group, Inc., and First Standard Financial Company LLC.
FINRA Letter of Acceptance, Waiver, and Consent No. 2019061956601
FINRA and Mr. Marzocco entered into a Letter of Acceptance, Waiver, and Consent No. 2019061956601 on November 5, 2021, after FINRA alleged that between June 2019 and December 2019, while associated with Woodstock Financial Group, Mr. Marzocco excessively and unsuitable traded a customer’s account, in violation of FINRA Rules 2111 and 2010. Specifically, FINRA alleged:
- Between June 2019 and December 2019, while registered through Woodstock Financial Group, Mr. Marzocco engaged in excessive and unsuitable trading in a customer’s account.
- During this period, Mr. Marzocco recommended more than 160 options transactions to his customer, primarily involving call options with short-term expiration dates.
- The customer relied on Mr. Marzocco’s advice and accepted his recommendations.
- Marzocco’s recommended trades caused the customer to pay $27,078 in commissions and other trading costs in approximately six months, even though the account’s average equity was only approximately $40,000.
- Collectively, those trades resulted in the customer’s account having an annualized cost-to-equity ratio of more than 112 percent—meaning the customer’s investments would have had to grow by more than 112 percent annually just to break even.
- Marzocco’s recommended securities transactions in the account of his customer were excessive and unsuitable.
- Accordingly, Mr. Marzocco violated FINRA Rules 21111 and 2010.
Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer but to generate commissions for the broker.
There are two primary indicators used to evaluate whether a financial advisor excessively traded an account. The first is turnover rate, which represents the number of times a portfolio of investments is replaced for another portfolio of investments. Generally, a turnover rate of six suggests excessive trading, but a turnover rate below four can be excessive in some cases.
The second indicator used to assess whether trading is excessive in an investment account is its cost-to-equity ratio. The cost-to-equity ratio measures the amount an account must appreciate to cover commissions and other expenses. That is, how much the account needs to grow just to break even. A cost-to-equity ratio of 20% generally indicates excessive trading has occurred. According to FINRA, the account at issue had a cost-to-equity ratio of more than 112%.
Excessive trading is an unethical and illegal practice. It is also a violation of securities rules and regulations and can cause enormous harm to customers.
Financial Advisor Leonard Joseph Marzocco (CRD No. 3106494)
Mr. Marzocco has ten years of experience in the securities industry and has been associated with eight different firms, including three firms that have been expelled from the industry by FINRA. Mr. Marzocco is not currently registered or associated with any brokerage firm.
According to his public disclosure report, Leonard Marzocco is a registered broker with a history of regulatory sanctions, customer complaints, and an employment termination after allegations of misconduct. In addition, in 2002, he pled guilty to a felony DWI. According to FINRA, this was his third DUI offense, having also been convicted in May 2000 and March 2001.
Mr. Marzocco has been the subject of at least seven customer complaints. Most recently, in 2017, a customer filed a securities arbitration claim alleging $82,699 in damages as a result of unsuitability, churning, commission abuse, fraud, misrepresentation, and breach of fiduciary duty. Mr. Marzocco denied wrongdoing but settled the dispute with the customer. The other customer disputes alleged unauthorized trading, misrepresentation, unsuitability, and failure to follow instructions.
FINRA’s BrokerCheck tool can be used to obtain Mr. Marzocco’s complete and updated disclosure report.
Woodstock Financial Group, Inc. & First Standard Financial Company LLC – A Duty to Supervise
Financial institutions like Woodstock Financial Group, Inc. and First Standard Financial Company LLC must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as excessive trading, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
How to Recover Losses or Obtain a Free Consultation
When an investor suffers investment losses due to misconduct by a financial advisor or broker-dealer, the investor can file a securities arbitration claim against their financial advisor and/or broker-dealer in an effort to be compensated.
Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.
If you have lost money with Mr. Marzocco, Wood Stock Financial Group, or First Standard Financial Company LLC, contact FINRA arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at august@ia-law.com, jorge@ia-law.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a bilingual law firm, fluent in both English and Spanish.