Publicly available records provided by the Financial Industry Regulatory Authority (FINRA) indicate that broker/advisor, Joseph Desapio (CRD # 5837553) was recently suspended from the securities industry by FINRA’s Department of Enforcement after an investigation into unsuitable recommendations which determined he willfully violated the Best Interest Obligation under Rule 15I-1 of the Securities Exchange Act of 1934 (Regulation BI).
The Law Office of Kevin J. Deloatch, Esq. is interested in speaking to investors who have complaints regarding Mr. Desapio.
Registration Background for Joseph Desapio
Mr. Desapio first became registered in the securities industry in 2010. He was most recently registered with New York, NY based Spartan Capital Securities, LLC (CRD # 146251) from May 2017 to June 2022. His prior registrations include Worden Capital Management LLC (CRD # 148366) from November 2016 to May 2017, and Legend Securities, Inc. (CRD # 44952) from August 2013 to November 2016.
FINRA’s Allegations Against Joseph Desapio
According to the FINRA Letter of Acceptance, Waiver and Consent (AWC) dated March 8, 2024 (No. 2022074025801), Mr. Desapio consented to, without either admitting to or denying, the following findings by FINRA’s Department of Enforcement:
- “From June 2017 through June 2021, [Mr.] Desapio recommended quantitatively unsuitable trades in four accounts held by three customers, one of whom was a senior”;
- “[Mr. Desapio’s] customers relied on his advice and routinely followed his recommendations and, as a result, [Mr.] Desapio exercised de facto control over the three customers’ accounts”;
- “[Mr.] Desapio’s trading resulted in high turnover rates and cost-to-equity ratios that were well above the traditional guideposts of six and 20 percent, respectively, as well as significant losses…”;
- “From September 2019 to March 2021, [Mr.] Desapio recommended 134 trades in one of Customer A’s accounts, resulting in an annualized turnover rate of 33 and an annualized cost-to-equity ratio of 145%”;
- “From November 2018 to August 2020, Desapio recommended 48 trades in Customer A’s other account, resulting in an annualized turnover rate of 12 and an annualized cost-to-equity ratio of 59% for this account”;
- “In February 2019, [Mr.] Desapio became the representative of record for Customer B’s account…Customer B was a 57 year-old widowed…conservative investor…”;
- “From February 2019 to June 2021, [Mr.] Desapio recommended 45 trades in Customer B’s account resulting in an annualized turnover rate of 8 and an annualized cost-to equity ratio of 44%”;
- “In May 2017, Customer C opened an account at Spartan with [Mr.] Desapio. At the time, Customer C was a 71-year-old insurance agent“;
- “From June 2017 through January 2021, [Mr.] Desapio recommended 131 transactions in Customer C’s account, resulting in an annualized turnover rate of 12 and an annualized cost-to-equity ratio of 72%”;
- “[Mr.] Desapio’s trading in the four customer accounts was excessive, unsuitable, and not in the best interest of these three customers given their investment profiles”; and
- By virtue of his actions, Mr. Desapio violated Exchange Act Rule 15I-1 of the Securities Exchange Act of 1934 (Regulation BI), FINRA Rule 2111 regarding suitability, and FINRA Rule 2010 regarding standards of commercial honor and principles of trade.
FINRA Suspends Joseph Desapio from Securities Industry
As a result of such violations and in addition to the above-described findings and conclusions, FINRA’s March 8, 2024 AWC also indicates that Mr. Desapio consented to the following sanction(s):
- a 15-month suspension from association with any FINRA member in all capacities.
Joseph Desapio Has a History of Securities Industry Customer Complaints
In addition to Mr. Desapio being suspended by FINRA from the securities industry regarding unsuitable recommendations, FINRA BrokerCheck for Mr. Desapio reveals that he has history of customer complaints and/or customer-initiated arbitrations, including but not necessarily limited to the following:
- On February 3, 2022, a customer-initiated arbitration was commenced against Mr. Desapio regarding alleged actions that occurred while he was associated with Spartan Capital Securities, LLC. The customer’s allegations included breach of fiduciary duty, negligence, breach of contract and churning. On January 10, 2023, the arbitration was settled in the amount of $70,000.00.
- On July 29, 2011, a customer initiated a written complaint against Mr. Desapio regarding alleged actions that occurred while he was associated with Brookstone Securities, Inc. (CRD # 13366). The customer’s allegations included poor equity performance and excessive commissions. The customer further alleged damages in the amount of $12,380.00. On March 1, 2012, the complaint was settled in the amount of $6,000.00.
Have You Lost Money with Joseph Desapio?
If you or someone you know has or had a brokerage account with Mr. Joseph Desapio and have concerns regarding losses in your investments or possible sales practice violations including fraud, you may be entitled to recover lost funds. The Law Office of Kevin J. Deloatch, Esq. has an extensive securities law practice and over 30 years of experience on Wall Street. Call today at (646) 792-2156 for a free consultation. The time to file your claim may be limited so you should call today to avoid delay.
