FINRA Suspends Jose Candelaria Padilla for Alleged Reg-BI Violations
Jose Candelaria Padilla (CRD #: 4847560), a broker registered with Nationwide Planning Associates, has been suspended by FINRA, according to his BrokerCheck record, accessed on March 20, 2023. Investors may have also engaged his services through NPA Asset Management. Read on to learn more about his alleged conduct as a broker.
On March 10, 2023, Jose Candelario Padilla consented to the entry of findings that he allegedly willfully violated the Care Obligation of Regulation Best Interest by recommending leveraged and inverse exchange-traded funds (NT-ETFs) without an adequate understanding of these products’ features and risks.
According to a Letter of Acceptance, Waiver & Consent (AWC), Jose Candelario Padilla allegedly recommended NT-ETFs to nine clients between March and October 2020. These clients allegedly held a total of 14 NT-ETF positions for periods ranging from 14-65 days and suffered net losses of approximately $26,000 through NT-ETF trading.
The AWC alleges that Jose Candelario Padilla did not have a sufficient understanding of NT-ETFs to have a reasonable basis to believe they would be suitable for these clients. For example, he allegedly did not fully understand that because NT-ETFs typically rebalance their portfolio every day (the “daily reset”), investors’ losses can be compounded each day.
The AWC concludes that Jose Candelario Padilla’s alleged recommendations violated Regulation Best Interest and FINRA Rules 2111 and 2010.
FINRA Rule 2111 and Regulation Best Interest
FINRA Rule 2111 requires brokers to tailor their investment recommendations to suit investors’ profiles, which describe their risk tolerance, tax status, age, and other characteristics.
Regulation Best Interest (Reg-BI) is an SEC regulation that requires brokerage firms to put their clients’ best interests first. For example, firms must conduct reasonable due diligence when researching investments to ensure their recommendations are suitable for the investor.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
Jose Candelario Padilla consented to the following sanctions:
- $2,500 fine
- 3-month suspension
- Restitution of $26,422 plus interest
His suspension will take effect on April 3, 2023, and will end on July 2, 2023.
You can read the full AWC here.
Pending Investor Disputes
On February 7, 2023, an investor alleged that Jose Candelaria Padilla purchased unsuitable investments in their account. They seek $750,000 in damages.
In a dispute filed on January 31, 2023, an investor alleged that Jose Candelaria Padilla engaged in the following:
- Fraud, including constructive fraud
- Misrepresentation and omission
- Unsuitable investment recommendations
- Failure to act in the client’s best interest
- Failure to supervise
- Breach of contract
The client seeks $500,000 in damages.
On December 21, 2022, an investor alleged Jose Candelaria Padilla executed unauthorized trades and mismanaged their account. They seek $182,000.
A dispute filed on March 19, 2019, alleged that Jose Candelaria Padilla doubled the client’s monthly distributions without their authorization, creating a debit balance in their account, between November 2009 and October 2018.
On July 5, 2018, a client alleged that Jose Candelaria Padilla made claims between 2007 and October 2011 that certain funds were “safe.” The investor seeks damages of $50,000.
A dispute filed on March 7, 2016, makes similar allegations to the dispute filed on January 31, 2023, but additionally alleges that he violated FINRA and NASD Rules, federal securities laws, and the Puerto Rico Uniform Securities Act and Civil Code. The client seeks $100,000 in damages.
His oldest pending dispute, filed on August 4, 2014, alleges that he made unsuitable investment recommendations, gave materially misleading investment advice and misleading risk disclosure, and overconcentrated them in Puerto Rico bonds and bond funds. The client seeks $100,000.
FINRA Rule 2020
FINRA Rule 2020 bans the use of fraudulent tactics, like deception or manipulation, as they relate to the purchase and sale of securities. The misrepresentation or omission of material facts violates this rule.
FINRA Rule 3110
FINRA Rule 3110 requires that firms establish systems of supervision to ensure their compliance with securities regulations. Firms must appoint supervisors and provide them with Written Supervisory Procedures (WSPs) to follow.
FINRA Rule 3260
Unauthorized trading violates FINRA Rule 3260, which limits brokers to exercising their trading discretion in pre-approved discretionary accounts.
Settled and Denied Disputes
On December 15, 2020, an investor alleged that Jose Candelaria Padilla recommended unsuitable investments and overconcentrated the client in them, made misrepresentations, and engaged in negligence. The client sought $290,800 but the dispute was denied by the firm.
Nine disputes filed from 2015-2019 collectively made allegations including fraud, failure to supervise, unsuitable investment recommendations, misrepresentations, negligence, breach of contract, and overconcentration. These allegations were made with regard to investments in Puerto Rico, including bonds and closed-end and open-end bond funds.
These nine disputes were settled for a total of $1.365 million.
On April 18, 2016, an investor filed a dispute alleging Jose Candelaria Padilla exhibited a lack of fiduciary responsibility. This dispute was settled for $69,000.
Four disputes filed in 2018 alleged that Jose Candelaria Padilla engaged in fraud, negligence, and breach of contract, and that he made misrepresentations and omissions as well as unsuitable investment recommendations. The disputes were settled for a collective $285,000.
Two disputes, also filed in 2018, made similar allegations and further alleged overconcentration and failure to supervise. They were settled for $1,138,750 in total.
Seven other disputes, filed from 2017-2020, variously alleged unsuitable recommendations of investments and/or strategies, overconcentration, breach of contract, negligence, and fraud. One dispute notably alleged that Jose Candelaria Padilla violated NYSE rules. These disputes were settled for a collective $402,000.
Jose Candelaria Padilla has passed the following exams:
- Series 66 – Uniform Combined State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
Jose Candelaria Padilla is a registered broker in Florida, New York, and Puerto Rico. He is also a registered investment adviser in Puerto Rico.
He has also worked for the following firms:
- Oriental Financial Services(CRD#:29753)
- NPA Asset Management (CRD#:131534)
- San Juan Capital Partners (CRD#:138997)
- Samuel A Ramirez & Company (CRD#:6963)
- R-G Investments (CRD#:113293)
Kurta Law Can Help
If you worked with Jose Candelaria Padilla and you have concerns about your investments, please contact us today at 877-600-0098 or firstname.lastname@example.org for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want 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.