John Cangialosi Suspended By FINRA For Allegedly Recommending Unsuitable Investments
John Cangialosi (CRD #: 3273830), a broker registered with SW financial, was suspended by FINRA, according to his BrokerCheck record, accessed on November 28, 2021.
According to an Acceptance, Waiver, and Consent agreement dated August 12, 2021, John Cangialosi consented to the findings that from October 2014 through December 2018, while associated with Legend Securities and Worden Capital Management, he excessively traded three customers' accounts in violation of FINRA Rules 2111 and 2010.
What is Excessive Trading?
Churning is another term for excessive trading, which occurs when brokers execute trades simply for the sake of generating commissions for themselves, without any financial benefit for their investors. It is prohibited under FINRA Rule 2111, under "quantitative suitability." Quantitative refers to the fact that the number of securities can be unsuitable as well as the number of securities.
John Cangialosi's alleged trading of the three accounts resulted in high turnover rates and cost-to-equity ratios.
- The turnover rate represents the number of times that a portfolio of securities is exchanged for another portfolio of securities.
- The cost-to-equity ratio measures the amount an account has to appreciate just to cover the commissions and other expenses.
For context, FINRA has stated that a turnover rate of six and an annualized cost-to-equity ratio above 20% indicates excessive trading.
- From October 2014 to October 2016, John Cangialosi effected 90 trades in Customer A's account, resulting in an annualized turnover rate of 13.7 and an annualized cost-to-equity ratio of 58.38%. John Cangialosi's trading in Customer A's account generated total trading costs of $173,337, including $169,342 in commissions, and caused $279,803 in realized losses.
- From January 2016 to December 2018, John Cangialosi effected 83 trades in Customer B's account, resulting in an annualized turnover rate of 20.23 and annualized cost-to-equity ratio of 95.74%. John Cangialosi's trading in Customer B's account generated total trading costs of $116,442, including $102,280 in commissions and $10,472 in margin interest, and caused $93,834 in realized losses.
- From March 2017 to October 2017, John Cangialosi effected 15 trades in Customer C's account, resulting in a turnover rate of 5.62 (equivalent to an annualized turnover rate of 8.43) and a cost-to-equity ratio of 26.14% (equivalent to an annualized cost to-equity ratio of 39.21%). John Cangialosi's trading in Customer C's account generated total trading costs of $21,450.
According to the findings, John Cangialosi's trading in these three customers' accounts was excessive and unsuitable given the customers' investment profiles. As a result of John Cangialosi's excessive trading, the customers suffered collective losses of $405,255, while paying total trading costs of $311,229.
As part of the terms of the AWC, John Cangialosi consented to the following:
- A nine-month suspension from associating with any FINRA member in all capacities. His suspension ends on June 6, 2022.
- A $7,500 fine
- Restitution of $271,622
You can read the full copy of the AWC here.
John Cangialosi has a prior history of customer disputes, including:
- On February 10, 2015, a dispute was filed against John Cangialosi for allegedly breaching a contract, engaging in fraud, breaching his fiduciary duties, and negligence. The damage amount requested was $250,000; however, the case was settled for $50,000.
- On January 17, 2009, a dispute was filed against John Cangialosi for allegedly executing unauthorized trades. The damage amount requested was $75,584.47; however, the case settled for $67,832.50.
According to an Acceptance, Waiver, and Consent agreement dated April 18, 2013, John Cangialosi consented to the findings that he allegedly failed to disclose, and in some instances to timely disclose on his transfer (Form U4) 6 unsatisfied judgments and/or liens. By failing to disclose or make timely disclosure of these unsatisfied judgments, John Cangialosi violated Article V, Section 2(c) of FINRA's By-Laws, and FINRA Rules 1122 and 2010.
Article V, Section 2(c) of FINRA's By-Laws requires brokers to keep their Form U4 "current at all times." At the same time, FINRA Rule 1122 prohibits registered brokers from filing registration information that is incomplete or inaccurate.
Violations of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rule 1122 also constitute violations of FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just principles in their business dealings.
As part of the terms of the AWC, John Cangialosi consented to
- A $5,000 fine
- A 3-month suspension from associating with any FINRA member in all capacities.
You can read the full copy of the AWC here.
On December 12, 2013, John Cangialosi filed for bankruptcy.
On February 6, 2009, J.P. Turner & Company permitted John Cangialosi to resign following allegations that he executed unauthorized trades. Making unauthorized trades in or facilitating unauthorized withdrawals from a customer's account is a breach of the duty to observe high standards of commercial honor and just and equitable principles of trade and thus a violation of FINRA Rule 2010.
John Cangialosi has passed the following exams:
- Series 63 - Uniform Securities Agent State Law Examination
- SIE - Securities Industry Essentials Examination
- Series 7 - General Securities Representative Examination
He is a registered broker in 19 states.
John Cangialosi has also worked with the following firms:
- Joseph Gunnar & Co (CRD#:24795)
- Brookstone Securities (CRD#:13366)
- Gunnallen Financial (CRD#:17609)
- Joseph Stevens & Company (CRD#:35459)
Kurta Law Can Help
If you have been victimized after working with John Cangialosi, don't hesitate to contact us today at 877-600-0098 or email@example.com for a free consultation.
For nearly 20 years, Kurta Law has advocated for investors to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.