Securities Arbitration Lawyer Blog
FINRA has suspended Jason Collichio from associating with any FINRA member in any principal capacity for three months. Mr. Collichio has been registered with Worden Capital Management LLC (“WCM”) in Garden City, New York, since 2009. He has been registered as a principal with the firm since 2012. Mr. Collichio initially registered with FINRA in 2003.
Iorio Altamirano LLP is currently investigating claims on behalf of WCM customers after the firm was sanctioned more than $1.5 million by FINRA, including restitution, for making unsuitable recommendations and excessively trading customers’ accounts. A FINRA restitution order does not preclude investors from pursuing their own claims to seek restitution or other available remedies. Investors harmed by WCM’s supervisory failures may have a claim against the firm. You can read more about it here.
If you have lost money with WCM, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential review of your account.
Jason Collichio AWC
Mr. Collichio and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on December 31, 2020, over allegations that from January 2015 to August 2017, Mr. Collichio failed to reasonably supervise two former registered representatives while he was the branch manager at WCM’s Rockville Centre branch in New York. Mr. Collichio was responsible for supervising the trading activity of all representatives located at the branch.
Specifically, FINRA alleged that the two brokers under Mr. Collichio’s supervision engaged in a pattern of recommending unsuitable active trading strategies to customers and churning of customer accounts. Mr. Collichio was aware of multiple red flags of unsuitable use of margin, excessive trading, and churning, including high cost-to-equity ratios and high turnover rates in the customer accounts. The cost-to-equity ratio represents the amount an account must appreciate just to cover commissions and other expenses; this is knowns as the “break-even point” where a customer may begin to see a return. The turnover rate represents the number of times a portfolio of securities is exchanged for another portfolio of securities. Typically, a turnover rate of 6 suggests that excessive trading has occurred. Likewise, a cost-to-equity ratio above 20% suggests excessive trading.
The brokers, who are not named in the AWC but are referenced as Representatives 1 and 2, solicited customers with speculative investment objectives and recommended costly short-term trading strategies to them. WCM placed Representatives 1 and 2 on heightened supervision in January 2015 because each had at least three customer complaints alleging sales practice violations in the previous two years.
Between December 2014 and December 2017, Representative 1 churned and excessively traded seven customers’ accounts, which realized losses of over $1.8 million from this trading while paying $529,056 in commissions.
Likewise, between January 2015 through at least December 2017, Representative 2 churned and excessively traded four customers’ accounts, which realized losses of over $1.1 million from this trading while paying $940,705 in commissions.
Mr. Collichio did not reasonably investigate the red flags or otherwise take meaningful action to stop the misconduct.
As part of the AWC, Mr. Collichio received a $5,000 fine and a three-month suspension in all principal capacities. He was also ordered to complete 20 hours of continuing education concerning supervisory responsibilities.
WCM AWC Findings
WCM is headquartered in Garden City, New York, and has been a FINRA member firm since February 2009. The firm is an introducing broker-dealer, generating most of its revenues from commissions charged in connection with buying and selling equities for its retail customers. WCM has six branch locations, primarily in the New York metropolitan area, and 49 registered representatives.
FINRA found that WCM recommended active short-term trading to retail customers with speculative investment objectives. Many WCM representatives also recommended that customers use margin to increase their buying power. WCM did not take action to investigate or stop trading in customers’ accounts, even though WCM received a monthly active account report that routinely flagged dozens of customer accounts indicative of excessive trading.
FINRA also found that, in August 2017, WCM interfered with customer requests to transfer accounts from WCM to another member firm in connection with the change in employment of 13 registered representatives. Additionally, from January 2016 to December 2020, WCM failed to timely file 59 amendments to the Uniform Applications for Securities Industry Registration or Transfer (Form U4s) and Uniform Termination Notice for Securities Industry Registration (Form U5s) for 13 of its registered persons to disclose the filing or resolution of customer arbitrations.
If you have lost money with WCM, contact New York securities 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 securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.