This post is part of a series of investigative blog posts that spotlight modern-day boiler rooms that operate under the guise of a reputable brokerage firm. Many of the broker-dealers featured in this series still use boiler room tactics such as cold-calling customers and high-pressure or aggressive sales tactics. Other brokerage firms have a propensity for broker misconduct, such as excessive trading, churning, unauthorized trades, and misrepresentation. Iorio Altamirano LLP is a securities arbitration law firm based in New York City. We represent investors nationwide who have suffered investment losses due to wrongful conduct by financial advisors and brokerage firms. We are investor advocates.
Other Investigative Blog Posts:
- In 2017, in collaboration with Columbia Law School, Reuters analyzed FINRA data and identified 48 firms whose brokers have been flagged for serious incidents. In 2021, our firm set out to update that analysis.
- Joseph Stone Capital was second on the Reuters list – and in the country – with 71.20% of its brokers having at least one of the most serious red flags on their public disclosure. Only one other brokerage firm in the country had more brokers on its roster with significant red-flag disclosures.
- In March 2021, seventy-six percent (76%) of registered representatives at Joseph Stone Capital, which includes brokers and supervisors, have significant red flag disclosures on their BrokerCheck. Significant red flag disclosures include regulatory sanctions, terminations of employment after allegations of misconduct, customer disputes that result in an award or settlement, and prior association with a firm that FINRA has expelled.
- More than half (54%) of the firm’s financial advisors and supervisors have previously been associated with a firm that FINRA has barred from the securities industry.
- Thirty-six percent (36%) of Joseph Stone Capital’s brokers and supervisors have been accused of excessive trading, churning, or unauthorized trading.
- Two of the firm’s top three (66.67%) executives have significant red flag disclosures on their BrokerCheck reports; the Chief Executive Officer, and majority owner of the firm, has worked at seven different brokerage firms that FINRA has shut down.
BACKGROUND: JOSEPH STONE CAPITAL L.L.C. (CRD#: 159744 / SEC#: 8-69014)
Joseph Stone Capital L.L.C. (“Joseph Stone Capital) has been registered with the Securities and Exchange Commission (“SEC”) and a Financial Industry Regulatory Authority (“FINRA”) member since 2013.
The firm has approximately 71 registered individuals, four branch offices, and is headquartered in Mineola, New York. The branch offices are believed to be in Mineola, NY, Hauppauge, NY, New York, NY, Miami, Florida.
According to its website, Joseph Stone Capital provides individualized financial services to retail customers.
JOSEPH STONE CAPITAL: DISCIPLINARY HISTORY
Joseph Stone Capital has been the subject of two regulatory actions. First, in 2016, the state of Montana investigated Joseph Stone Capital after broker Lawrence Sullivan cold-called the office of Montana’s Commissioner of Securities and Insurance (“CSI”) to pitch an investment in January 2016. According to the state’s filing, Mr. Sullivan pitched an investment about PayPal to an Assistant Analyst at the Montana regulator. The analyst informed Mr. Sullivan that he was speaking to the CSI and that the SCI regulates the offer and sale of securities in Montana. At that point. Mr. Sullivan denied he was attempting to solicit an investment in a security, and the phone call ended shortly thereafter. According to the regulator’s report, investigators found “fraudulent and unethical” practices, including excessive trading in client accounts – resulting in commissions totaling 28 percent of the $877,493 invested by clients in Montana. The firm settled with the state on April 18, 2017, agreeing to pay $30,000 in restitution to clients without admitting wrongdoing.
In 2019, the state of Massachusetts alleged that the firm had failed to register two firm principals in charge of supervising brokers that were conducting business in Massachusetts. Joseph Stone Capital paid $18,250 to settle the matter. As part of the settlement, the firm was ordered to cease and desist from the conduct that was in violation of Massachusetts securities laws.
JOSEPH STONE CAPITAL: A HIGH CONCENTRATION OF BROKERS WITH RED FLAGS
The term “boiler room” often refers to an outbound call center that sells questionable investments through unfair, dishonest, and high-pressure sales tactics.
Historically, Long Island, New York has been a haven for boiler-room brokerage firms. This notoriety has inspired blockbuster movies such as “Boiler Room” and “The Wolf of Wall Street.” The Wolf of Wall Street was based on the true story of broker Jordan Belfort and his firm, Stratton Oakmont. Jordan Belfort pleaded guilty to securities fraud and money laundering in 1999. One of Joseph Stone Capital’s current brokers, Henry Corrao, used to work for Stratton Oakmont.
Many broker-dealers still use boiler room tactics such as cold-calling customers and high-pressure or aggressive sales tactics. Other modern-day boiler room brokerage firms have a propensity for broker misconduct, such as excessive trading, churning, and unauthorized trades.
In 2017, Reuters investigated and exposed 48 brokerage firms that tended to employ brokers with histories of misconduct sanctions, legal disputes, and financial distress. Each of the 48 firms had more than 30 percent of its brokers with at least one significant red flag on their records.
FINRA requires brokers to publicly disclose 23 different incidents that the regulator believes could cause concern to investors. The Reuters analysis only examined the 12 most serious incidents among the 23 that FINRA requires brokers to disclose, which included: (i) customer disputes regarding an investment-related complaint that resulted in a settlement or award/judgment; (ii) a final, formal proceeding initiated by a regulatory authority for a violation of investment-related rules or regulations; (iii) financial liens; (iv) criminal charges that resulted in a conviction or plea arrangement; and (v) employee separation after allegations. At the time, the 48 firms oversaw about 4,600 brokers and billions in investor funds.
In 2017, Joseph Stone Capital was second on the list, and in the country, with 71.2% of its brokers having at least one of the most serious red flags on their public disclosure. At the time, that compared to 9% of brokers industry-wide who had at least one significant red flag on their record. Reuters sought comment from Joseph Stone Capital before publishing its 2017 findings, but the firm did not respond.
In March 2021, Iorio Altamirano LLP set out to update the Reuters 2017 analysis. We found that 65% of Joseph Stone Capital’s registered representatives had at least one of the most serious red flags on their public disclosure reports, a slight decrease from 2017.
Although the Reuters’ analysis was comprehensive, it did not consider brokers’ past associations with firms that FINRA had expelled as one of its significant red flags. That was an oversight. A review of regulatory sanctions and registration histories of the firms and their brokers suggests the same players are involved from ownership to management to brokers. In short, brokers and supervisors with significant disciplinary histories get shuffled around from one “boiler room” broker-dealer to another, taking their questionable sales and supervisory practices with them.
At Joseph Stone Capital, fifty-four percent (54%) of its brokers had at some point in their careers worked at a firm that was later expelled by FINRA, with more than a quarter of the brokers working at multiple firms that FINRA has expelled.
When you include this disclosure to the other 12 red flags used by Reuters in its 2017 analysis, seventy-six (76%) of brokers at Joseph Stone Capital have significant red flag disclosures on their BrokerCheck reports. That is, 76% of Joseph Stone Capital’s registered representatives, which includes its salesforce and management, have a history that includes at least one of the following:
- Customer disputes that resulted in settlements or judgments.
- Regulatory sanctions.
- Civil judgments.
- Personal bankruptcies.
- Employment terminations after allegations of misconduct.
- Prior association with a firm that FINRA has expelled.
Iorio Altamirano LLP’s investigation also revealed the following:
- Seventeen percent (17%) of Joseph Stone Capital’s brokers have regulatory sanctions on their public disclosures. A regulatory sanction is defined as a final, formal proceeding initiated by a regulatory authority to violate investment-related rules or regulations.
- Forty-nine percent (49%) of Joseph Stone Capital’s brokers have a history of at least one customer dispute that has resulted in a monetary settlement, arbitration award, or civil judgment. A customer dispute is defined as a customer-initiated, investment-related complaint, arbitration proceeding, or civil suit containing allegations of sale practice violations against the broker.
In addition, thirty-six (36%) brokers have been accused of excessive trading, churning, or unauthorized trading. Specific customer complaints and allegations can be found below.
Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer but to generate commissions for the broker.
Churning is a more egregious variation of excessive trading. Churning refers to a situation where the broker executed an excessive number of trades and did so with the intent to defraud or reckless disregard for the customer’s interest.
Unauthorized trading often occurs in non-discretionary accounts, where a customer retains discretion. In non-discretionary accounts, brokers must obtain a customer’s permission every time before placing a trade.
Excessive trading, churning, and unauthorized trading are unethical and illegal practices. They are all also violations of securities rules and regulations and can cause enormous harm to customers.
JOSEPH STOEN CAPITAL: DISCLOSURES BY BROKER
Joseph Stone Capital has approximately 71 registered individuals, four branch offices, and is headquartered in Mineola, New York. The branch offices are believed to be in Mineola, NY, Hauppauge, NY, New York, NY, Miami, Florida.
Below is a summary of significant disclosures by Joseph Stone Capital’s current workforce. FINRA’s BrokerCheck tool can be used to obtain complete and updated disclosure reports.
|Name||CRD No.||Office||Customer Dispute (Settle or Award)||Financial||Judgment / Lien||Regulatory||Employment Separation After Allegations||Criminal||Association with Expelled Firm(s)|
|Joseph A Ambrosole||5732488||New York, NY||2||1||2||3|
|Joseph Audia||2909761||Hauppauge, NY||2|
|John Baek||3188422||Mineola, NY||1||2|
|Ross Adam Barish||3094364||Mineola, NY||2||1|
|Dwayne (Matthew) Bullen||6394076||Mineola, NY||2|
|Xiaoqing (Cathy) Cao||5243272||New York, NY||1|
|Henry (Hank) Corrao||1455690||Mineola, NY||4||3||1||2||7|
|Joseph C. Fallarino||6220858||Mineola, NY||1|
|Omar Fernandez||2262319||New York, NY||1||2|
|Madeline Ferreri||1175852||New York, NY||1||1|
|Demion Michael Forrest||5984504||Mineola, NY||1|
|Anthony Graziano||2862096||New York, NY||1||2||1|
|El Hadji Sam Gueye||4175877||New York, NY||1||1||1||1|
|Adrian Darnell Hall||5412207||New York, NY||1|
|Mitchell Johnston Hoffman||6192370||New York, NY||1||1|
|Kendell James||4489264||New York, NY||1||3||2|
|Nigel James||4490687||Mineola, NY||2||2|
|Imtiaz (Raana) Khan||4084250||New York, NY||1||1||1|
|Todd F. Kling||3034284||New York, NY||4||1|
|Maksim (Max Goldman) Kulchitskiy||5921483||New York, NY||1|
|Ibrahim Ethem Kurtulus||2287372||New York, NY||2||2||1||1|
|Travis J Lippmann||5908823||New York, NY||1||2|
|Dawn M Lopez||4159823||New York, NY||1|
|Adam Maggio||4177365||Mineola, NY||2||2||1|
|Damian Maggio (CEO)||2864247||Mineola, NY||1||1||5|
|Philip Marchese||5905008||New York, NY||1||2|
|David Martin Martirosian||5261144||New York, NY||1||4||4|
|Rocco (Rock) Michael Maselli||2791357||Mineola, NY||3||2|
|Michael James May||4712287||Mineola, NY||1||2|
|Jonathan J Miller||5772258||New York, NY||2||1||1||2|
|Peter Mirenda||4397656||New York, NY||3||3|
|Steve Allen Moise||4995443||Mineola, NY||1|
|Miguel Angel Murillo||4875997||New York, NY||2||1||1|
|Khaled (Ed) H Nasseri||4627234||Mineola, NY||1||6|
|Richard Charles Nelson||1128664||Mineola, NY||1|
|Troy Allen Orlando||6055474||New York, NY||1|
|Anthony Pace||2481049||New York, NY||4||1||1||1||4|
|Joseph J. Pagan||6152661||New York, NY||5||1|
|James Vincent Pardy (CCO)||2900751||Mineola, NY||1||2||1||1|
|Christopher Stephen Perrillo||4867894||Miami, FL||1||2|
|Andrew Scott Pesner||1971579||Hauppauge, NY||5||1|
|Martin John Petela||5587657||New York, NY||1||2|
|Laurence (Larry) Craven Petit III||2215495||Midlothian, VA||8||1||1|
|Raj Ashok Raghani||4858036||Miami, FL||1|
|Kerry Patrick Raheb||2648082||Mineola, NY||2||1||1||7|
|Manuel Paul Ramos||4085247||New York, NY||4||2|
|Derek John Rehill||2935032||Mineola, NY||1||1|
|Chris Paul Richards||4799136||Mineola, NY||3||1|
|Douglas Jarrett Rosenberg||3214215||Hauppauge, NY||3|
|Joseph Anthony Salino Jr.||2557935||New York, NY||8||3|
|Roger Thomas Spann||2211632||New York, NY||4||2||1||3|
|John Walter Stalanski||2922709||New York, NY||1|
|Michael Anthony Valdini||5599281||Mineola, NY||3||3|
|Sebastian Wyczawski||2835135||Manorvillie, NY||2||1|
|Leonid Yurovsky||4554905||Mineola, NY||1||1||1|
|Brian Feng Zen||2152802||New York, NY||1|
The troubled history of Joseph Stone Capital’s workforce is a reflection of the firms’ management and ownership. The firm is run and owned by individuals who have disclosure reports that are littered with red flags.
JOSEPH STONE CAPITAL – MANAGEMENT AND OWNERSHIP
With regard to management, two of the top three (66.67%) executives have been the subject of regulatory sanctions. The Chief Executive Officer (CEO) and majority owner, Damian Maggio, has 23 years of experience in the securities industry and has been associated with 14 firms, including 5 firms that have been expelled by FINRA. He is the subject of one customer dispute that was settled.
Chief Compliance Officer (CCO), Vincent James Pardy, has 22 years of experience in the securities industry and has been associated with 7 different firms. In 2002, he was the subject of a customer dispute that resulted in an award of $175,000 to a client. The client alleged that unsuitable and frequent transactions.
Mr. Pardy’s public disclosure report also reveals a troubling past with regulators and employers. In 2005, he was suspended by NASD (the predecessor to FINRA) for failing to reasonably supervise several brokers in the face of red flags indicating improper sales practices and for failing to report seven customer complaints. In 2007, he was discharged from Reid & Rudiger LLC for violating firm policy and contractual agreement by removing confidential customer information and confidential firm information from the firm’s premises.
How to Recover Financial Losses or Obtain a Free Consultation
Securities arbitration is a unique and complex practice area. Investors should seek out experienced counsel who understands the FINRA forum and can navigate the arbitration process to effectively advocate on their behalf.
If you or a loved one were a customer of Joseph Stone Capital and either sustained financial losses or suspect inappropriate activity in your investment or retirement accounts, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at firstname.lastname@example.org or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.
**Corrections and Clarifications: June 9, 2021**
- An earlier version of this blog post stated incorrectly that Joseph Stone Capital, LLC was first in the country on Reuter’s 2017 list of brokers who have been flagged for serious incidents. Joseph Stone Capital, LLC was second on the list, not first.
- An earlier version of this blog post referred imprecisely to the number of expelled firms with which the firm’s CEO and majority owner, Damian Maggio, has been associated with. In one section of the blog post, it stated that Mr. Maggio had been associated with 7 firms that have been expelled by FINRA, while in another section of the post, it stated that Mr. Maggio had been associated with 5 firms that have been expelled by FINRA. According to Mr. Maggio’s public disclosure report with FINRA, he has been associated 5 brokerage firms that have been expelled by FINRA.
- An earlier version of this blog post indicated that Louis Ambrosio had a customer dispute disclosed on his BrokerCheck report. Iorio Altamirano LLP’s statement was based on publicly available information at the time of publication. Iorio Altamirano LLP believes the information regarding Mr. Ambrosio’s customer dispute disclosure was accurate at the time of publication. The customer dispute disclosure has since been removed from Mr. Ambrosio’s public disclosure report, and Iorio Altamirano LLP has removed Mr. Ambrosio from the list of brokers above that have significant disclosures.