Michael Colletti Subject of FINRA Complaint
Michael Colletti (CRD #: 4577898), a broker registered with Sovereign Global Advisors, allegedly engaged in unauthorized and excessive trading, according to his BrokerCheck record, accessed on March 23, 2023. If you want to know more about his alleged conduct as a broker, keep reading.
Pending FINRA Complaint
On February 15, 2023, Michael Colletti was the subject of a FINRA complaint alleging that he executed 73 unauthorized trades with a total principal value of approximately $157,231 in an elderly client’s account between March 2017 and February 2019.
He allegedly exercised de facto control over the client’s account by doing so, and this trading allegedly resulted in losses of $5,417.17.
The complaint further alleges that Michael Colletti engaged in unsuitable and excessive trading in that same client’s account by executing an additional 52 transactions between May 2018 and February 2019. These trades, consisting of buying and selling equity positions, allegedly generated $5,237 in commissions and trading costs and resulted in a cost-to-equity ratio of more than 72% and a turnover rate over 10.
When annualized, those measurements are equal to 86% and 12. For context, annualized cost-to-equity ratios exceeding 20% and turnover rates over 6 are considered markers for potentially excessive trading.
FINRA alleges that Michael Colletti violated FINRA Rules 2111 and 2010. This complaint is currently pending.
You can read a copy of the complaint here.
FINRA Rule 2111
FINRA Rule 2111 defines suitable investments as securities that fit an investor’s profile, which describes an investor’s age, tax status, and financial goals.
Trading activity must also meet the requirement of quantitative suitability. Excessive trading generates trading fees and commissions that can severely reduce an investor’s ability to make a profit.
Investors who rely on brokers for recommendations may be able to recover their losses through FINRA arbitration.
FINRA Rule 2010
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
2018 FINRA Suspension
On July 31, 2017, FINRA filed a complaint against Michael Colletti alleging that he failed to reasonably supervise cold callers, who he allegedly hired without following firm procedures, between May and October 2014.
The complaint alleged that National Securities Corporation was not aware of the employment of some of these cold callers and therefore some were not subject to the requisite background checks. FINRA further alleged that, despite working in the same two rooms as the cold callers, Michael Colletti claimed to be unaware that several of these individuals possessed unauthorized call scripts containing allegedly improper questions and possible misrepresentations.
For example, the firm’s Written Supervisory Procedures (WSPs) allegedly prohibited cold callers from discussing general or specific products or services, but some scripts allegedly referenced sending the potential client an information package or comparison sheets for certain securities.
The complaint alleged that Michael Colletti violated NASD Rule 3010 and FINRA Rule 2010.
FINRA Rule 3110
FINRA Rule 3110 requires that firms establish systems of supervision in order to detect and prevent violations of securities regulations. This includes appointing supervisors and providing them with Written Supervisory Procedures (WSPs) to guide their work.
Sanctions
On January 29, 2018, Michael Colletti consented to the following sanctions:
- $7,500 fine
- 3-month suspension in a principal capacity
His suspension ran from February 20 to May 19, 2018.
You can read a copy of the FINRA complaint here and the Order Accepting Offer of Settlement here.
Background Information
Michael Colletti has passed the following exams:
- Series 65 – Uniform Investment Adviser Law Examination
- Series 63 – Uniform Securities Agent State Law Examination
- Series 79TO – Investment Banking Registered Representative Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
- Series 24 – General Securities Principal Examination
Michael Colletti is a registered broker in Kansas, New Jersey, New York, Pennsylvania, and Texas. He is also a registered investment adviser in New Jersey and Texas.
He has also worked for the following firms:
- IC Advisory Services (CRD#:140190)
- The Investment Center (CRD#:17839)
- Cadaret Grant & Company (CRD#:10641)
- Securities America (CRD#:10205)
- National Securities Corporation (CRD#:7569)
- First Midwest Securities (CRD#:21786)
- American Capital Partners (CRD#:119249)
- Commerce One Financial (CRD#:100340)
Kurta Law Can Help
If you worked with Michael Colletti and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com 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.
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