Craig Scott Capital Broker Barred By FINRA
Craig Scott Taddonio of New York New York a stockbroker formerly employed by Craig Scott Capital LLC is referenced in a Financial Industry Regulatory Authority (FINRA) National Adjudicatory Council Decision which affirms FINRA’s Hearing Panel’s barring of Taddonio in all capacities based upon (1) Taddonio failing to reasonably supervise the firm and (5) Taddonio failing to cooperate with FINRA personnel in an investigation into his control over brokers who excessively traded in customer accounts. In the Matter of Department of Enforcement v. Craig Scott Taddonio et. al. Complaint Nos. 2015044823501 and 2015044823502 (Jan. 29, 2019).
According to the National Adjudicatory Council Decision, Taddonio was cognizant of several red flags concerning Craig Scott Capital LLC brokers’ excessive trading. Apparently, Taddonio failed to take any reasonable steps in stopping the trades from being effected in customers’ accounts. Rather, the Decision stated that the excessive trading had actually been encouraged through the business model utilized by Craig Scott Capital. Evidently, at least thirty customers of the firm had been affected by this excessive trading.
The Decision further revealed that Taddonio had not taken any responsibility for committing the misconduct. He reportedly failed to take any action to correct his mistakes, never offering customers’ any compensation for losses they incurred. Moreover, Taddonio reportedly neglected to make sure that appropriate controls and procedures had been implemented by the firm to stop brokers from engaging in excessive trading. The Decision stated that Taddonio’s supervisory failures were not isolated instances; he had a pattern of instances which involved his failure to supervise. This reportedly caused customers to incur substantial losses at the same time that Taddonio and the firm benefited financially.
The Decision revealed that it was not sufficient for FINRA’s Extended Hearing Panel to simply bar Taddonio from engaging in any supervisory activities given Taddonio’s egregious actions. The National Adjudicatory Council noted that Taddonio was pivotal in Craig Scott Capital’s culture in which brokers were permitted and rewarded for effecting excessive trades in customers’ accounts. Particularly, Taddonio reportedly stressed revenue generation on his sales force, and awarded brokers based on their performance in opening accounts and accumulating revenue. The Decision stated that Taddonio’s activities in this respect, combined with Taddonio’s failure to supervise, evidenced that Taddonio was a danger to investors. National Adjudicatory Counsel barred Taddonio in all capacities for failing to supervise; conduct violative of FINRA Rules 2010 and 3010.
Moreover, the National Adjudicatory Council stated that Taddonio was barred in all capacities for having falsified his testimony before FINRA personnel; conduct violative of FINRA Rules 2010 and 8210. The Decision stated that Taddonio falsified testimony in regard to the conversations at Craig Scott Capital, claiming that they were not recorded. FINRA’s National Adjudicatory Council found Taddonio’s lack of veracity as rendering Taddonio unfit to remain working in the securities industry.
FINRA Public Disclosure reveals that Taddonio has been identified in three customer initiated investment related disputes containing accusations of Taddonio’s misconduct while employed with Craig Scott Capital. In particular, a customer initiated investment related arbitration claim involving Taddonio’s conduct was settled for $178,500.00 in damages based upon allegations that Taddonio failed to supervise a broker who made misrepresentations to the customer concerning investments, traded excessively in the customer’s account, effected transactions in the customer’s account that were not suitable for the customer concerning the customer’s investments in exchange traded notes, stock and over-the-counter equities. FINRA Arbitration No. 13-03442 (Apr. 16, 2015).
Thereafter, a customer initiated investment related arbitration claim concerning Taddonio’s activities was resolved for $338,454.00 in damages supported by accusations that the customer’s account was handled in a negligent manner and mismanaged; over-the-counter equities and stock transactions were executed in the customer’s account that were not suitable for the customer; trades were effected in the customer’s account on an excessive and unauthorized basis; the customer’s account was churned; fiduciary duties had been breached; and misrepresentations were made to the customer concerning the customer’s investment transactions. FINRA Arbitration No. 13-02069 (May 1, 2015).
Moreover, Taddonio was subject of a customer initiated investment related arbitration claim where the customer was awarded $252,193.83 in compensatory damages based on Taddonio being found liable on the customer’s claims of omissions, misrepresentations, unjust enrichment; lost opportunity damages; breach of contract; breach of fiduciary duty; unauthorized trading; failure to supervise; churning; unsuitability; and negligence in regard to the customer’s investments in derivatives, penny stock and other speculative investments. FINRA Arbitration No. 15-00376 (July 26, 2016).
Taddonio’s registration with Craig Scott Capital LLC was terminated on January 28, 2016.