Unsuitable Trading Practices Exposed: How Desapio’s Misconduct Impacted Investors
Picture yourself as a trusting investor, placing your hard-earned money in the hands of a financial advisor, only to discover the entrusted advisor trading excessively and unsuitably. For three unfortunate customers, this was a reality when their chosen financial advisor, Desapio, traded in their accounts against their investment profiles.
High Turnover, High Costs: Understanding Investment Terms
In common parlance, ‘turnover rate’ alludes to how frequently investment holdings are sold within a year. A high rate of 12, for example, can signify feverish trading – the kind that occurred in a 71-year-old insurance agent’s account under Desapio.
But here’s the kicker: the hefty price this 12 turnover rate carried. With each buy and sell transaction, trading costs, inclusive of commission, add up. In this case, the insurance agent’s account shelled out a crushing $27,527 in total trading costs, out of which $19,778 were commissions. Clearly, the advisor had been playing fast and loose with his client’s wealth!
Adding Injury to Insult: Debts, Borrowing, and Violating Rules
As if unjustifiable trading and losses weren’t bad enough, Desapio ended up skirting FINRA rules too. His unsanctioned action of borrowing a whopping $20,000 from a customer without the company’s prior approval, is as audacious as it is unacceptable. Essentially, he broke every investors’ trust.
The Aftermath: Desapio’s Termination and What That Means
In light of these events, Spartan, the firm where Desapio was registered, terminated his registration, thus cutting the strings and holding him accountable. But here’s the rub: an arbitration had already been filed against Desapio, alleging he borrowed money and even issued a promissory note to a customer. Plus, he was found owing the Firm a sum of $22,992.38!
Despite leaving the firm, Desapio continues to be under the radar of FINRA’s jurisdiction. Essentially, he hasn’t escaped the long arm of the regulatory body.
Investors’ Take from This Experience
While we could do with fewer tales of financial wizards playing the villain, there’s no denying that this piece of news has a few important lessons for investors: understanding your trading costs, asking questions on turnover rates, and being wary of any side dealings with your advisor.
One thing’s for sure: investing will never be as easy as pie, but with due diligence, it doesn’t have to be a high stakes poker game either. So, here’s to life’s lessons, the hard way, from the school of ‘Desapio’s Misconduct and Dismissal’!
Remember, a wise investor is not just a market watcher but also a financial advisor watchdog. Stay informed, stay vigilant, and as the saying goes, never let your money run off with the stranger who promises to double it!