John Cangialosi Involved in SEC Complaint Alleging Fraudulent Scheme
John Cangialosi (CRD #: 3273830), a broker formerly registered with SW financial, allegedly helped orchestrate a fraudulent scheme, according to his BrokerCheck record, accessed on April 12, 2025. If you want to learn more about his alleged conduct as a broker, keep reading.
SEC Complaint
On January 31, 2025, the Securities and Exchange Commission filed a civil complaint against John Cangialosi, Caner Otar, Peter Girgis, Gene Sarabella, Enrico Carini, Chester Scotland, Franz Lambert II, Max Infinity Management LLC (d/b/a Max Infinity Fund), Max Infinity Venture Partners, Inc., Elder Fund Management LLC, JJRP United Corp, and Grand Level Consulting Inc.
The SEC alleged that the defendants conducted a fraudulent scheme that raised over $70 million from more than 550 investors through high pressure sales tactics, misleading statements, and other deceptive tactics.
This scheme allegedly involved investment fund interests offered by Max Infinity Fund and Elder Fund (the Funds) which claimed to represent shares of stock in companies that had not yet held initial public offerings (pre-IPO companies).
John Cangialosi was allegedly one of the orchestrators of this scheme, though investors were allegedly made to believe that Gene Sarabella was the owner and organizer of the Funds. John Cangialosi was allegedly also suspended by FINRA for part of the relevant period.
He and other defendants allegedly conducted their scheme through entities such as Max Infinity Management, Max Infinity Venture Partners, and Elder Fund Management (Max and Elder Entities), and boiler room operators JJRP United Corp and Grand Level Consulting.
Alleged False and Misleading Statements
Investors were allegedly led to believe that the Funds were low-risk investments that would yield short-term profits, that the Funds had a record of success with pre-IPO stock, and that investors’ funds would be held in escrow until the IPO.
According to the SEC’s allegations, none of these claims were true. Instead, the SEC alleged that neither the Funds nor any of the defendants were registered with the SEC and that the Funds were managed by people with no investment fund management experience.
Further, the defendants allegedly sold interests in these IPOs at mark-ups of 45-100% of the purchase price that the Max and Elder Entities paid. They allegedly did not inform investors about these charges, a portion of which were allegedly used to pay commissions to sales agents.
At the time of complaint filing, the SEC alleged, only one pre-IPO company had gone public. This allegedly caused significant losses for investors in the Funds.
This complaint is currently pending.
Bar by FINRA
On March 6, 2024, FINRA barred John Cangialosi for allegedly refusing to appear for on-the-record testimony requested by FINRA.
According to a Letter of Acceptance, Waiver & Consent (AWC), FINRA allegedly requested his testimony as part of an investigation into his possible outside business activities.
The AWC concluded that the alleged refusal to provide testimony constituted violations of FINRA Rules 8210 an 2010. You can read the AWC here.
FINRA Rule 8210
FINRA Rule 8210 requires members to provide documents, information, and testimony upon request by FINRA.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
Other business activities
John Cangialosi’s detailed BrokerCheck record discloses that he is President of John S. Cangialosi, Corp.
Investor Disputes
On December 5, 2022, an investor named John Cangialosi in allegations of unsuitable investment recommendations, churning, negligent conduct, and failure to supervise. The client seeks $510,152.82 in this pending dispute.
On October 10, 2022, John Cangialosi was named in a dispute alleging breach of contract, unjust enrichment, failure to supervise, negligence, and violation of the suitability rule. This dispute was settled for $10.9 million. You can read the arbitration award here.
In a dispute filed on March 21, 2022, an investor named John Cangialosi in allegations of fraud, breach of contract, negligence, unauthorized trading, excessive commissions, and churning and other violations of the suitability rule. The client seeks $1,281,156 in this pending dispute.
On February 10, 2015, a dispute was filed against John Cangialosi alleging that he breached his contract, and engaged in fraud and negligence. This dispute was settled for $50,000.
FINRA Rule 2111
FINRA Rule 2111 requires brokers to recommend securities that sufficiently suit an investor’s financial goals. Brokers must consider the information in an investor’s profile, such as their age, risk tolerance, tax status, and overall financial situation.
Investors who rely on brokers for recommendations may be able to recover their losses through FINRA arbitration.
FINRA Rule 3110
FINRA Rule 3110 requires that firms establish supervisory systems to ensure their compliance with securities regulations. Firms must appoint supervisors and provide them with Written Supervisory Procedures (WSPs) to follow.
FINRA Rule 3260
FINRA Rule 3260 prohibits brokers from conducting discretionary trading outside discretionary accounts, which are pre-approved for discretionary trading by the firm and the client.
Maryland Regulatory Action
On August 17, 2021, the Maryland Division of Securities censured John Cangialosi following his entering into an AWC with FINRA wherein he consented to a nine-month suspension and other sanctions.
With the Division of Securities, he also consented to withdraw his registration to not reapply as a broker or investment adviser representative with the state.
FINRA Suspension
On August 12, 2021, John Cangialosi consented to the entry of findings that he allegedly engaged in excessive trading in three client accounts.
According to an AWC, John Cangialosi’s alleged trading 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. FINRA alleged that John Cangialosi engaged in the following trading:
- Customer A: John Cangialosi allegedly executed 90 trades, resulting in an annualized turnover rate of 13.7 and an annualized cost-to-equity ratio of 58.38%. John Cangialosi’s trading allegedly generated total trading costs of $173,337, including $169,342 in commissions, and resulted in $279,803 in realized losses.
- Customer B: John Cangialosi allegedly effected 83 trades, resulting in an annualized turnover rate of 20.23 and an annualized cost-to-equity ratio of 95.74%. This allegedly 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.
- Customer C: John Cangialosi allegedly executed 15 trades, 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%). His trading allegedly generated $21,450 in total trading costs.
The AWC concluded that these allegations constitute violations of FINRA Rules 2111 and 2010.
Sanctions
John Cangialosi consented to the following sanctions:
- Nine-month suspension from associating with any FINRA member in all capacities
- $7,500 fine
- Restitution of $271,622
His suspension ran from September 7, 2021, to June 6, 2022. You can read the full copy of the AWC here.
Background Information
John Cangialosi has passed the following exams:
- Investment Banking Registered Representative Examination – Series 79TO
- Securities Industry Essentials Examination – SIE
- General Securities Representative Examination – Series 7
- Uniform Securities Agent State Law Examination – Series 63
John Cangialosi has also worked with the following firms:
- SW Financial (CRD#:145012)
- Worden Capital Management (CRD#:148366)
- Legend Securities (CRD#:44952)
- Joseph Gunnar & Company (CRD#:24795)
- Brookstone Securities (CRD#:13366)
- J.P. Turner & Company (CRD#:43177)
- 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 info@kurtalawfirm.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.