A former America Northcoast Securities broker is barred by the Financial Industry Regulatory Authority (FINRA) after he traded in non-traditional exchange-traded funds (ETFs) in the accounts of firm clients, even when the investments were not suitable for them.
According to the self-regulatory authority (SRO), Dominic Anthony Tropiano solicited the buying and selling of leveraged ETFs in at least 47 America Northcoast Securities customers’ accounts between 5/2015 and 4/2016, including 866 securities transactions involving 15 non-traditional exchange-traded funds.
Of these transactions, 33 of them were purportedly conducted in just one customer’s account. Another 19 took place in another client’s account. The customers were not aware these transactions were going to occur and they did not give their consent.
FINRA, in a letter of acceptance, waiver, and consent, said that Tropiano did not understand the following when trading in the ETFs:
- The daily reset feature for these investments
- Their benchmark or index price
- The different risks involved
- The daily exchange rate risk
- Any volatility that might be involved
Tropiano has not worked in the securities industry since 2016. According to his BrokerCheck record for the entry regarding the FINRA bar, he did not have reasonable grounds to think the ETF transactions were suitable for any of the customers in whose accounts he traded them. The SRO said that, in fact, considering these clients’ investment profiles, the exchange-traded funds trades were definitely unsuitable investments for them.
FINRA found that while making these exchange-traded fund trades, Tropiano was not properly registered with the SRO at the time. The former America Northcoast Securities broker settled with FINRA without denying or admitting to its findings.
FINRA did not order Tropiano to pay restitution because America Northcoast Securities has already paid over $1.5M to customers who sustained losses from the ETF trades made by the ex-America Northcoast Securities broker. Tropiano does have multiple customer disputes against him pending over this matter.
Tropiano has over 10 years in the securities industry; previously he was a registered broker with Key Investment Services, Natcity Investments, Inc., and McDonald Investments, Inc. America Northcoast Securities appears to no longer be a registered brokerage firm.
Leveraged Exchange-Traded Funds
Leveraged ETFs are complex investments that are not for all investors, especially inexperienced retail investors who can’t handle a great deal of risk. Our Leveraged ETF fraud lawyers work with investors throughout the US in fighting to recoup their losses caused by fraud, other wrongdoing, or negligence. We also have experience with bringing inadequate supervision claims against broker-dealers that failed to properly supervise their financial representatives.
If you are an investor who has sustained losses in Leveraged ETFs, you may have grounds for filing a FINRA arbitration claim if unsuitability, misrepresentations and omissions, failure to supervise, churning, or some other type of fraud was a factor. Please contact Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) so that we can help you explore your legal options. Your initial consultation is a free, no obligation case assessment. SSEK Law Firm works with clients nationwide.