America Northcoast Stockbroker Barred For Misconduct
Dominic Anthony Tropiano of Cleveland Ohio a stockbroker formerly registered with America Northcoast Securities Inc. has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that (1) Tropiano executed unauthorized trades in customer accounts (2) Tropiano made unsuitable investment recommendations to the firm’s customers and (3) Tropiano engaged in securities activities without registration. Letter of Acceptance Waiver and Consent No. 2016051098501 (May 9, 2019).
According to the AWC, from May of 2015 to April of 2016, eight hundred sixty-six securities trades had been solicited by Tropiano for American Northcoast customers. Supposedly, those trades pertained to fifteen exchange traded funds, and concerned at least forty-seven of the firm’s customers. Evidently, Tropiano failed to adequately comprehend the features, terms and risks of non-traditional exchange traded funds that he advised customers to trade from May of 2015 to April of 2016.
The AWC referenced that aspects of the non-traditional exchange traded funds, including compounding of the tracking error; a daily reset feature; volatility of options, futures contracts and swap agreements; and exchange rate risks had not been understood by Tropiano at the time that his recommendations had been made to customers. Consequently, the AWC stated that Tropiano neglected to have an adequate basis to conclude that the investments were advisable for investors; conduct violative of FINRA Rules 2010 and 2111.
The AWC additionally stated that Tropiano made unsuitable investment recommendations to the customers given their conservative objectives for investing. FINRA noted that leveraged and inverse leveraged exchange traded funds are generally unsuitable for investors that intend on holding the exchange traded funds positions for multiple trading periods, especially in situations where the market is volatile. In Tropiano’s case, some of the forty seven customers who maintained American Northcoast accounts had conservative objectives for investing. FINRA found Tropiano’s unsuitable recommendations in this respect to be violative of FINRA Rules 2010 and 2111.
Moreover, FINRA revealed that unauthorized trades had been executed by Tropiano in a customer’s account. Particularly, from May of 2015 to September of 2015, a total of thirty- three transactions were executed in the account of MC, and nineteen additional non-traditional exchange traded funds transactions were placed in the accounts of customer IC. Evidently, customers MC and IC were not provided any information about the transactions and did not authorize them. Instead, the trades were reportedly executed at Tropiano’s direction. FINRA found Tropiano’s unauthorized trading to be violative of FINRA Rules 2010.
FINRA additionally found that Tropiano was not registered at the time that he advised customers or otherwise engaged in securities activities. The AWC stated that America Northcoast’s Chairman and Chief Financial Officer, RB, happened to be Tropiano’s father in law. Apparently, Tropiano was merely hired to fill a research position for an affiliate that was not registered with FINRA as a securities broker dealer. However, because of the affiliate having shared an office location with American Northcoast, Tropiano was positioned next to America Northcoast’s President and Chief Compliance officer, CB – Tropiano’s brother in law.
The AWC stated that customers of Tropiano’s former employer, Key Investment Services, corresponded with Tropiano for purposes of Tropiano’s investment advice. Apparently, customers who considered opening up accounts with American Northcoast had been advised by Tropiano to bring their accounts to the firm. However, the customers’ accounts established from May of 2015 and April of 2016 showed that CB was the customers’ registered representative. Those customers were advised by Tropiano to effect the eight hundred sixty-six exchange traded fund transactions. All the while, Tropiano was not a registered stockbroker of America Northcoast. Consequently, FINRA found Tropiano’s conduct violative of FINRA Rule 2010 and NASD Rule 1031.
FINRA Public Disclosure confirms that Tropiano is referenced in eight customer initiated investment related disputes pertaining to allegations of his violative conduct while working with Key investment Services and America Northcoast Securities Inc. Specifically, on August 1, 2016, a customer filed an investment related arbitration claim concerning Tropiano’s conduct where the customer sought $400,000.00 in damages founded on accusations that contractual obligations to the customer had been breached; fiduciary duties were breached; unauthorized trades had been effected in the customer’s investment account; transactions were not suitable; the customer’s account was handled in a negligent manner; transactions ran afoul of FINRA Rules as well as the Ohio Securities Act; and America Northcoast Securities Inc. failed to supervise Tropiano’s leveraged exchange traded funds transactions. FINRA Arbitration No. 16-02099 (Aug. 1, 2016).
Then, a customer filed an investment related arbitration claim regarding Tropiano’s activities in which the customer requested $330,000.00 in damages based upon allegations that the firm neglected to supervise Tropiano’s trading; transactions were effected without the customer’s consent; trades were not suitable given the customer’s objectives for investing or risk tolerance; fiduciary obligations owed to the customer had been breached; transactions were not compliant with FINRA Rules; and the customer’s account was negligently administered from 2015 to 2016. FINRA Arbitration No. 16-02216 (Aug. 15, 2016).
Another customer filed an investment related arbitration claim involving Tropiano’s conduct where the customer sought $800,000.00 in damages supported by accusations of breach of contract; breach of fiduciary duty; unauthorized trading; failure to supervise; unsuitability; negligence; Ohio Securities Act violations; FINRA Rules violations; and fraud in reference to the customer’s 2016 leveraged exchange traded fund positions. FINRA Arbitration No. 16-02370 (Aug. 31, 2016). Subsequently, a customer initiated investment related arbitration claim concerning Tropiano’s activities was resolved for $85,000.00 in damages founded on allegations that Tropiano gave the customer bad advice in regard to the customer’s mutual fund purchases. FINRA Arbitration No. 16-01178 (Dec. 27, 2017).
Thereafter, a customer filed an investment related arbitration claim regarding Tropiano’s activities in which the customer requested $100,000.00 in damages based upon accusations of Tropiano’s unauthorized, unsuitable and negligent leveraged exchange traded fund trades in customer accounts causing customers to incur losses. FINRA Arbitration No. 17-00156 (Jan. 23, 2017). Further, a customer filed an investment related arbitration claim involving Tropiano’s conduct where the customer sought $250,000.00 in damages supported by allegations of America Northcoast Securities Inc. failing to supervise Tropiano’s activities which led to his unauthorized, unsuitable trades in the customer’s investment account. FINRA Arbitration No. 17-01197 (May 17, 2017).
Tropiano’s employment with American Northcoast Securities Inc. has been terminated as of June 10, 2016.