Securities Arbitration Lawyer Blog
FINRA has suspended Frank Venturelli from the securities industry for 11 months. Frank Venturelli was a financial advisor and registered representative at the following firms:
- Arive Capital Markets, Bay Ridge, NY (September 2019 to December 2019); and
- First Standard Financial Company LLC, Red Bank, NJ (November 2014 to September 2019).
FINRA alleged that Frank Venturelli excessively traded three accounts between July 2016 and November 2018. Mr. Ventuerrli has also received at least one customer complaint alleging excessive trading and unsuitable trade.
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. Excessive trading is unethical and illegal.
There are two primary indicators used to evaluate whether an account was excessively traded. 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. FINRA’s Department of Enforcement alleged that trading in accounts managed by Venturelli had turnover ratios of 60.57, 30.29, and 40.06.
The cost-to-equity ratio is the second statistic used to evaluate whether trading in an investment account is quantitatively suitable. 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 percent generally indicates excessive trading has occurred. The accounts that FINRA reviewed had cost-to-equity ratios of 145.53%, 88.18%, and 105.89%.
Brokerage firms like Arive Capital Markets and First Standard Financial Company LLC must properly supervise financial advisors and customer accounts. Brokerage firms must also 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 sufficiently supervise their financial advisors or the investment account activity, they may be liable for investment losses sustained by customers.
According to a 2017 investigation by Reuters, Arive Capital Markets hired more brokers with a history of significant disclosures than all but two other firms in the country. In 2021, Iorio Altamirano LLP set out to update that analysis.
The investigation revealed that eighty percent (80%) of Arive Capital Markets’ brokers and supervisors have significant red flag public disclosures. Significant red flag disclosures include:
- regulatory sanctions,
- terminations of employment after allegations of misconduct,
- customer disputes that result in an award or settlement, and
- prior association with a firm that FINRA has expelled.
You can read the full investigative report here: Investigative Report: Iorio Altamirano LLP Investigation into Arive Capital Markets Reveals Troubling Pasts for Owners, Executives, and Brokers.
If you have lost money with financial advisor Frank Venturelli, Arive Capital Markets, First Standard Financial Company LLC, contact August Iorio of Iorio Altamirano LLP at august@ia-law.com or toll free at (855) 430-4010 for a free and confidential evaluation of your account.
Even if you have received partial restitution from FINRA, you may still have an arbitration claim.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.