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Pasquale Rappa is the Subject of a FINRA Fine and Suspension

Mar 11, 2022 Failure to Supervise

Pasquale Rappa (CRD #: 5901386), a broker registered with SW Financial, is the subject of a FINRA fine and suspension, according to his BrokerCheck record, accessed on February 22, 2021.

Churning Allegations

According to an Acceptance, Waiver, and Consent agreement dated November 30, 2021, Pasquale Rappa, allegedly failed to supervise a former First Standard Financial representative, who, while under Pasquale Rappa's heightened supervision, excessively and unsuitably traded the accounts of three customers.

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. 

According to the findings, Pasquale Rappa was allegedly aware of multiple red flags of excessive and unsuitable trading in elderly customers' accounts, but he failed to reasonably investigate and take appropriate action to address those red flags.

  • One broker allegedly engaged in short-term trades in the three affected accounts, including multiple same-day sales and purchases. 
  • Pasquale Rappa allegedly learned through his review of the daily trade blotter that the broker also purchased and sold the same security in one of his customer's accounts 41 times. 

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.

Sanctions

As part of the terms of the AWC, Pasquale Rappa consented to:

  1. A two-month suspension 
  2. A $5,000 fine. 
  3. Satisfactorily complete 20 hours of continuing education concerning supervisory responsibilities.

You can read a copy of the AWC here.

Unsuitability and Churning Allegations

On January 4, 2016, Pasquale Rappa was named in a complaint alleging churning relating to various securities. The award found Pasquale Rappa liable for $44,734 plus interest.

You can access the full arbitration details here.

Background Information

Pasquale Rappa 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 24 - General Securities Principal Examination

He is a registered broker in 14 states.

Besides SW Financial, Pasquale Rappa has also worked with the following firms: 

  • First Standard Financial Company (CRD #: 168340)
  • Legend Securities  (CRD#:44952)
  • Tryco Securities  (CRD#:104025)
  • Brookville Capital Partners (CRD#:102380)
  • John Thomas Financial (CRD#:40982)

Kurta Law Can Help

If you worked with Pasquale Rappa and you have concerns about your investments, please 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.