Ohio Stockbroker Jerry Cicolani Finally Barred From Financial Industry

After pleading guilty to two criminal counts of selling unregistered securities, The Financial Industry Regulatory Authority (“FINRA”), the agency primarily charged with regulating the nation’s stockbrokers, finally barred former stockbroker, Jerry A. Cicolani, Jr. (“Cicolani”) from the securities industry. According to FINRA’s website, “FINRA has permanently barred [Cicolani] from acting as a broker or otherwise associating with firms that sell securities to the public.”

Sadly, the bar came much too late for many of Cicolani’s former clients. For years, FINRA, had largely overlooked numerous customer complaints and other accusations of bad conduct in Cicolani’s formal record. By the time he was barred, Cicolani had amassed nearly 70 complaints over a 13 year period. The final straw seemed to be the suit brought by the U.S. Securities & Exchange Commission (the “SEC”) in May 2014 for Cicolani’s alleged role in a Ponzi scheme that defrauded dozens of investors out of roughly $7 million. Four months after the suit was filed, FINRA finally took action and barred Cicolani.

For the affected customers, FINRA did not take action fast enough, especially given the warning signs. A FINRA spokesperson, Michelle Ong, seemingly recognized this sentiment when noting, “[W]e regret that we did not bring a formal action against Mr. Cicolani earlier.” Many of Cicolani’s complaints originated from his time working for Merrill Lynch. From 1991 to his resignation from Merrill Lynch in 2010, Cicolani was named in over 60 customer complaints during that time period. Yet, time and time again, these complaints were largely overlooked by both his employer and regulators. In 2004, Cicolani was subject to an SEC inquiry based on his handling of customer accounts, yet Merrill Lynch did not terminate his employment because the SEC never sanctioned Cicolani for his conduct. Instead, Cicolani resigned years later after another investigation, this time initiated by Merrill Lynch.

After resigning from Merrill Lynch, Cicolani began employment with PrimeSolutions Securities. Much like Merrill Lynch before, PrimeSolutions later defended the hire by referencing that regulators had not taken any serious actions against Cicolani prior to his hire. However, Cicolani’s tenure with PrimeSolutions is the focus of the latest claims that ultimately caused FINRA to permanently bar Cicolani from the industry. Cicolani was accused of selling unregistered securities to investors as part of his role in an alleged Ponzi scheme. His employment was terminated the day after the SEC filed suit and he was barred by FINRA four months later. Last month, Cicolani’s role in the Ponzi scheme crossed into the criminal realm of punishment as Cicolani pled guilty to two counts of selling unregistered securities on charges brought by the Federal Bureau of Investigation.

Over the last several years, FINRA has placed a stronger emphasis on pursuing repeat offenders. This includes higher sanctions, longer license suspensions and the possibility of brokers and firms being permanently barred from the industry. While these stiffer punishments could prove more effective for firms and some brokers, the punishments will have little effect on brokers who chose to the leave the industry. Securities firms have a duty to supervise the conduct of their stockbrokers and can be liable themselves for the stockbroker’s conduct for failure to adequately do so. Claims against brokers are often resolved through FINRA arbitrations.

The attorneys at Shepherd Smith Edwards & Kantas (“SSEK”) have more than 100 years of combined securities law and industry experience. SSEK has represented customers from virtually every state and many from other countries around the world. If you were a client of Cicolani or believe you have been wronged through misrepresented or poor investments, contact SSEK for a free, no obligation consultation of your legal rights.