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FINRA Fines Former IBN Rep for Unsuitable Alternative Investment Sales

By Mari Nicholson

FINRA Fines Former IBN Rep for Unsuitable Alternative Investment Sales

The Financial Industry Regulatory Authority has suspended former IBN Financial Services representative Angelo J. Piccone for five months and fined him $10,000 after finding that Piccone made unsuitable investment recommendations to a retail customer and used unapproved communication channels for securities business.

According to FINRA, between November 2020 and February 2021, while associated with IBN, Piccone recommended that a retail customer invest 77% of her net worth – not including her primary residence – in speculative alternative investments.

Piccone recommended 11 sales of the speculative, illiquid alternative investments totaling $457,000 to the customer, despite the customer’s stated moderate risk tolerance, an annual income of no more than $25,000 and a net worth, not including her primary residence, of $587,438. According to FINRA, the customer’s investment objectives were preservation of capital, current income, and funding retirement. Her objectives did not include speculation.

Piccone’s recommendations that the customer invest $457,000 in speculative alternative investments were not in the customer’s best interest based on her investment profile, including her moderate risk tolerance. Piccone earned $23,905.81 in commission in connection with his recommendations of these alternative investments to the customer.

Furthermore, FINRA also found that from April 2021 to June 2022, Piccone violated recordkeeping and communication rules by using his personal mobile device to exchange text messages with the customer about securities business, including one text message in which Piccone made an unbalanced and misleading statement to the customer about the prospects of recovering her investment in a certain speculative investment. He told the customer that the bond’s company was in the process of being dissolved and that “[w]hen the company is sold we will get your money back.” FINRA found that Piccone’s statement was unbalanced and misleading because it made only positive claims about the prospects of recovering the customer’s investment and did not address the potential for loss.

IBN Financial Services Inc., where Piccone was associated at the time, did not approve the use of personal devices for business-related communications.

In addition to the five-month suspension and $10,000 fine, FINRA ordered Piccone to disgorge $23,905.81 in commissions he received in connection with his recommendations of the alternative investments to the customer. Piccone consented to the findings without admitting or denying them.

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