The Financial Industry Regulatory Authority (FINRA) suspended broker-dealer Michael Laurence Digaetano of West Lake Village, California, and fined him $5,000 for allegedly failing to reasonably supervise a subordinate, which according to FINRA, contributed to the subordinate broker's ability to willfully violate industry rules.
During its investigation, FINRA found that between 2007 and 2008, while associated with the firm J.P. Turner & Company, LLC, one of Digaetano's subordinate employees willfully violated several SEC, NASD and FINRA regulations, making unsuitable recommendations that caused multiple customers to suffer losses totaling approximately $600,000, while the offending broker received gross commissions of approximately $240,000.
FINRA charged that, as the subordinate's immediate supervisor, Digaetano failed to reasonably supervise his employee by taking steps to detect and prevent these violations. According to the Authority, had Digaetano reasonably supervised his employee, he would have discovered at least four red flags that indicated the misconduct.
These indicators included a pattern of mutual fund switching, identifying all trades as "unsolicited," recommending only Class A mutual fund shares—which effectively maximized commission—and several other irregularities that routinely required Digaetano's approval.
Digaetano did not contest the allegations, but accepted the findings, suspension, and fine.
Digaetano's suspension expires on September 18, 2012.
If you invested with Michael Laurence Digaetano or his firm J.P. Turner & Company, LLC, and believe that failure to supervise and/or unsuitable recommendations have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.