Joseph Audia is the Subject of a FINRA Fine and Suspension
Joseph Audia (CRD #: 2909761), a broker registered with VCS Venture Securities, is the subject of a FINRA fine and suspension, according to his BrokerCheck record, accessed on February 12, 2021.
According to an Acceptance, Waiver, and Consent agreement dated December 20, 2021, Joseph Audia, while employed as a Joseph Stone Capital supervisor, allegedly failed to supervise a registered representative, who excessively and unsuitably traded in certain customer accounts.
Joseph Audia also allegedly failed to enforce commission restrictions imposed by the firm.
What is Churning?
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.” This means that the number of trades—as well as the type of trades—must fit the customer’s needs.
The alleged trading of the accounts by the Joseph Stone Capital representative 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.
According to the findings, Joseph Audia was reportedly provided with active account reports for certain customer accounts that included multiple red flags indicating excessive trading, including high cost-to-equity ratios and high turnover rates in those customer accounts. Joseph Audia allegedly did not reasonably investigate those red flags.
What is FINRA’s Failure to Supervise Rule?
FINRA’s rules guide the conduct of its members, and these rules include requirements that firms supervise their brokers and financial advisers. The rule addressing supervision is FINRA Rule 3110.
FINRA 3110 requires firms to maintain a supervisory system reasonably designed to achieve compliance with FINRA rules. It also requires that the firm designate a registered principle whose job it is to carry out supervisory responsibilities. The firm must make reasonable efforts to determine that all supervisory personnel are qualified, either by experience or training.
As part of the terms of the AWC, Joseph Audia consented to
- Two-month suspension
- $5,000 fine.
- Satisfactorily complete 20 hours of continuing education concerning supervisory responsibilities.
You can read a copy of the AWC here.
Joseph Audia has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
- Series 4 – Registered Options Principal Examination
- Series 24 – General Securities Principal Examination
He is a registered broker in 43 states.
Joseph Audia has also worked with the following firms:
- First Midwest Securities. (CRD#:21786)
- American Capital Partners (CRD#:119249)
- Milestone Financial Services (CRD#:43295)
- Joseph Gunnar & Co. (CRD#:24795)
- Kedem Capital Corporation (CRD#:18178)
- Foster Jeffries Securities (CRD#:30144)
Kurta Law Can Help
If you worked with Joseph Audia 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 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.