The Financial Industry Regulatory Authority (“FINRA”) has suspended financial advisor Joseph Ambrosole from the securities industry for six months. Mr. Ambrosole consented to the suspension after FINRA alleged that he excessively and unsuitably traded the accounts of two customers. FINRA also fined Mr. Ambrosole, who was also suspended by FINRA in 2017 for unethical sales practices, $5,000 and ordered him to pay $147,031.50 in restitution.
Mr. Ambrosole, who has only eight years of experience in the securities industry, has a history of associations disreputable broker-dealers, customer complaints, and regulatory sanctions.
The alleged conduct occurred while Mr. Ambrosole was employed by Joseph Stone Capital L.L.C. in New York, New York.
If you have suffered financial losses investing with Joseph Ambrosole or Joseph Stone Capital L.L.C., or suspect that Mr. Ambrosole did not have your best interest in mind when recommending investments or making account transactions, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential review of your account or annuity contract.
Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Joseph Stone Capital.
Joseph Stone Capital L.L.C.
According to a 2017 investigation by Reuters, out of all of the brokerage firms in the country, Joseph Stone Capital hired the second most brokers with a history of significant disclosures. In 2021, Iorio Altamirano LLP set out to update that analysis.
The investigation revealed that seventy-six percent (76%) of Joseph Stone Capital’s brokers and supervisors have significant red flag public disclosures. 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.
You can read the full investigative report here: Investigative Report: Iorio Altamirano LLP Investigation into Joseph Stone Capital L.L.C. Reveals Troubling Pasts for Owners, Executives, and Brokers
Mr. Ambrosole is one of the brokers who had serious incidents reported on his BrokerCheck report.
FINRA Letter of Acceptance, Waiver, and Consent No. 2019061947601
FINRA and Mr. Ambrosole entered into a Letter of Acceptance, Waiver, and Consent No. 2019061947601 on April 7, 2021, after FINRA alleged that Mr. Ambrosole excessively and unsuitable traded the accounts of two customers between December 2017 and June 2020. Specifically, FINRA alleged:
- Ambrosole engaged in quantitatively unsuitable trading in two customer accounts.
- The first account belonged to an elderly customer, who was 78 years old when he opened the account. Prior to December 2017, the elderly customer sustained permanent, progressive, neurological, and cognitive impairments.
- The customer’s account had average monthly equity of approximately $300,000, and during the relevant time period, Mr. Ambrosole recommended and executed 157 trades, which caused the customer to pay more than $126 in commissions and other trading costs.
- Ambrosole’s recommended trades resulted in an annualized cost-to-equity ratio of approximately 20 percent, which means that the elderly customer’s account would have had to grow by more than 20 percent annually just to break even.
- The account belonged to a married senior couple with limited investment knowledge and experience.
- The married couple’s joint account had average monthly equity of approximately $70,000.
- From July 2019 to June 2020, Mr. Ambrosole recommended and executed 40 trades in the joint account, which caused the married couple to pay more than $20,400 in commissions and other trading costs.
- Ambrosole’s recommended trades resulted in an annualized cost-to-equity ratio of approximately 35 percent in the joint account.
- The elderly customer and the married couple relied on Mr. Ambrosole’s advice and accepted his recommendations.
- Collectively, Mr. Ambrosole’s recommendations caused the elderly customer and the married couple to pay $147,031.50 in commissions and other trading costs during the relevant period.
- Ambrosole’s recommended securities transactions were excessive and unsuitable given the customers’ investment profiles.
- As a result of the foregoing conduct, Mr. Ambrosole violated FINRA Rules 2111 and 2010.
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.
There are two primary indicators used to evaluate whether a financial advisor excessively traded an account. The first is turnover rate, which represents the number of times a portfolio of investments is replaced for another portfolio of investments. Generally, a turnover rate of six suggests excessive trading, but a turnover rate below four can be excessive in some cases.
The second indicator used to assess whether trading is excessive in an investment account is its cost-to-equity ratio. The cost-to-equity ratio measures the amount an account must appreciate to cover commissions and other expenses. That is, how much the account needs to grow just to break even. A cost-to-equity ratio of 20% generally indicates excessive trading has occurred. The accounts at issue had cost-to-equity ratios of 20% to 35%.
Excessive trading is an unethical and illegal practice. It is also a violation of securities rules and regulations and can cause enormous harm to customers.
Financial Advisor Joseph A Ambrosole (CRD No. 5732488)
Joseph Albert Ambrosole has only eight years of experience in the securities industry but a history of associations disreputable broker-dealers, customer complaints, and regulatory sanctions.
In eight years, Mr. Ambrosole has been associated with six different firms, including three firms that have been expelled by FINRA:
- Joseph Stone Capital, L.L.C., from November 2017 to the present.
- Alexander Capital, L.P. from July 2017 to November 2017.
- Meyers Associates, L.P. from August 2015 to September 2016 (expelled by FINRA).
- Joseph Stone Capital, L.L.C., from April 2015 to July 2015.
- Global Arena Capital Corp from March 2015 to April 2015 (expelled by FINRA).
- Laidlaw & Company (UK) Ltd. from August 2012 to March 2013.
- Obsidian Financial Group, LLC from September 2011 to August 2012 (expelled by FINRA)
In February 2017, Mr. Ambrosole was suspended by FINRA for executing five unauthorized trades in a customer’s account in October 2015, in violation of FINRA Rule 2015. In addition to the five-month suspension, Mr. Ambrosole was fined $5,000 and ordered to pay restitution in the amount of $645.
Mr. Ambrosole has also been the subject of at least two customer disputes:
- Customer Dispute (August 2018): A customer filed a securities arbitration complaint, alleging over $100,000 in damages. The customers alleged that common law fraud, breach of fiduciary duty, negligence (gross negligence), and breach of contract. The dispute was settled by Global Arena Capital Corp, the firm that employed Mr. Ambrosole at the time of the conduct.
- Customer Dispute (March 2018): A customer filed a securities arbitration complaint alleging $275,000 in damages as a result of churning, unsuitable recommendations, and unsuitable overconcentration. The dispute was settled by Mr. Ambrosole and Global Arena Capital Corp, the firm that employed Mr. Ambrosole at the time of the conduct, for $54,900.
Mr. Ambrosole’s BrokerCheck report also discloses that he is the subject of a $57,199 outstanding tax lien held by the IRS.
Joseph Stone Capital – A Duty to Supervise
Financial institutions like Joseph Stone Capital must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as excessive trading, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
How to Recover Financial Losses or Obtain a Free Consultation
If you have suffered investment losses with Joseph Ambrosole or Joseph Stone Capital or suspect other inappropriate activity occurred in your investment or retirement account, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at email@example.com or toll-free at (855) 430-4010 for a free and confidential review of your legal rights.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.
**Corrections and Clarifications: June 30, 2021**
- An earlier version of this blog post incorrectly stated that according to a 2017 investigation by Reuters, out of all of the brokerage firms in the country, Joseph Stone Capital hired the most brokers with a history of significant disclosures. According to a 2017 investigation by Reuters, out of all of the brokerage firms in the country, Joseph Stone Capital hired the second most brokers with a history of significant disclosures, not the most.