Securities Arbitration Lawyer Blog
The Financial Industry Regulatory Authority (“FINRA”) has suspended stockbroker Joseph Lianzo from the securities industry for eight months. Mr. Lianzo consented to the suspension after FINRA alleged that from March 2016 through November 2019, while associated with Laidlaw & Company (UK) LTD. and SW Financial, Mr. Lianzo excessively traded four customers’ accounts and placed 13 unauthorized transactions in violation of FINRA Rules 2111 and 2010. As a result of churning and excessive trading, the customers incurred high commissions and fees, and significant realized investment losses.
Customers of Mr. Lianzo, Laidlaw & Company (UK) LTD, or SW Financial should consult with a securities arbitration law firm. If you or a loved one were a customer of Joseph Lianzo, Laidlaw & Company (UK) LTD, or SW Financial LLC, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.
Iorio Altamirano LLP represents investors nationwide that have disputes with their financial advisors or brokerage firms, such as Laidlaw & Company (UK) Ltd or SW Financial.
FINRA Letter of Acceptance, Waiver, and Consent No. 2018058278601
FINRA and Mr. Lianzo entered into a Letter of Acceptance, Waiver, and Consent on August 31, 2021, after FINRA alleged that between March 2016 and November 2019, Mr. Lianzo excessively traded four customers’ accounts in violation of FINRA Rules 2111 and 2010. FINRA also alleged that Mr. Lianzo placed 13 unauthorized transactions in accounts of two of those four customers, in violation of FINRA Rule 2010. Specifically, FINRA alleged:
- Lianzo engaged in quantitatively unsuitable trading in the account of one customer at Laidlaw, Customer A, and in the accounts of three customers at SW Financial, Customers B, C, and D.
- Lianzo recommended the trading in the accounts for the four customers, and they routinely followed his recommendations.
- As a result, Mr. Lianzo exercised de facto control over the four customers’ accounts. Lianzo’s trading of the accounts resulted in high turnover rates and cost-to-equity ratios, as well as significant losses.
- Specifically, Mr. Lianzo engaged in quantitatively unsuitable trading in Customer A’s account. Between March 2016 and March 2017, Customer A’s account exhibited an annualized turnover rate of 35 and an annualized cost-to-equity ratio of 145%. Customer A’s account incurred losses of $42,487 and paid $15,169 in commissions.
- During the period October 2017 through November 2019, Mr. Lianzo also engaged in quantitatively unsuitable trading in the accounts of Customers B, C, and D.
- Customer B’s account exhibited an annualized turnover rate of 15 and an annualized cost-to-equity ratio of 65%. Customer B’s account incurred losses of $95,570 and paid $22,975 in commissions.
- Customer C’s account exhibited an annualized turnover rate of 18 and an annualized cost-to-equity ratio of 78%. Customer C’s account incurred losses of $112,173 and paid $51,781 in commissions.
- Customer D’s account exhibited an annualized turnover rate of 15 and an annualized cost-to-equity ratio of 72%. Customer D’s account incurred losses of $43,078 and paid $37,581 in commissions.
- Lianzo’s trading in his four customers’ accounts was excessive and unsuitable given the customers’ investment profiles.
- Therefore, Lianzo violated FINRA Rules 2111 and 2010.
- Additionally, between February 14, 2017, and March 16, 2017, while registered through Laidlaw, Mr. Lianzo placed seven trades in Customer A’s account without Customer A’s authorization, knowledge, or consent.
- Between August 9, 2018, and October 31, 2018, while registered through SW Financial, Mr. Lianzo placed six trades in Customer B’s account without Customer B’s authorization, knowledge, or consent.
- Therefore, Lianzo violated FINRA Rule 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.
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.
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. According to FINRA, the accounts at issue had an annual turnover rate between 15 and 35.
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. According to FINRA, the accounts at issue had cost-to-equity ratios between 65% and 145%.
Financial Advisor Joseph Augustien Lianzo (CRD No. 4516842)
Joeseph Augustien Lianzo, who had only 19 years of experience in the securities industry, has a history of customer complaints and associations with disreputable firms.
Mr. Lianzo has been affiliated with nine different brokerage firms, including two which have been expelled from the industry by FINRA:
- SW Financial, from September 2017 to the present.
- Arive Capital Markets, from March 2017 to October 2017.
- Laidlaw & Company (UK) Ltd., from September 2015 to August 2017.
- Cape Securities Inc., from August 2014 to September 2015.
- Salomon Whitney LLC, from October 2012 to August 2014.
- P. Turner & Company, L.L.C., from December 2004 to October 2012.
- New Castle Financial Group, Inc. (expelled by FINRA), from August 2004 to December 2004.
- Newbridge Securities Corporation, from April 2003 to August 2004.
- Harrison Securities, Inc. (expelled by FINRA), from April 2003 to May 2003.
- Milestone Financial Services, Inc., from April 2002 to March 2003.
Mr. Lianzo has been the subject of 2 customer complaints and securities arbitrations relating to allegations of suitability, excessive trading, churning, and unauthorized trading. Both cases resulted in monetary compensation to the harmed customer(s).
FINRA’s BrokerCheck tool can be used to obtain Mr. Lianzo’s complete and updated disclosure reports.
SW Financial and Laidlaw & Company (UK) Ltd – A Duty to Supervise
Financial institutions like SW Financial and Laidlaw & Company (UK) Ltd 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 Lianzo, SW Financial, or Laidlaw & Company (UK) Ltd or suspect other inappropriate activity occurred in your investment or retirement account, contact securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.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.