Finra Freezes Long Island Supervisor Who Bankrolled Cold-Callers
The Financial Industry Regulatory Authority has fined and suspended a broker who hired cold-callers off the books without the knowledge of the independent broker-dealer that designated him to run one of its offices of supervisory jurisdictions.
From May 2014 to October 2014, Michael C. Colletti hired at least ten cold callers to work from a National Securities office in Melville, Long Island, according to a January 29 posted on a Financial Industry Regulatory Authority disciplinary action website. The majority of them were not registered with the firm, and read unapproved scripts that involved them directly in solicitations, such as asking what stocks prospects held and who handles their investments.
Among the most egregious allegations: “A few scripts incorrectly described National Securities as a ‘former trading division of Fidelity Investments,’ which was not true,’” the settlement letter said. Fidelity owns a clearing business known as National Financial Services.
Coletti, who claimed he was unaware of the unauthorized scripts, despite working about 20 feet away from the callers in the same room, consented to pay a $7,500 fine and accept a three-month suspension.
He neither admitted nor denying Finra’s findings that he failed to reasonably supervise the callers, violating rules requiring enforcement of written supervisory procedures and requiring “high standards of commercial honor.
Colletti, who has worked at six independent broker-dealers since 2004, did not return a call for comment to his office at The Investment Center Inc., a broker-dealer in Glen Cove, N.Y. that he now affiliates with.
According to the settlement, National Securities was not able to fulfill its required policy of performing background checks on all the cold callers because Colletti and another broker with whom he split office maintenance costs paid them a weekly salary from corporations they controlled and from a personal bank account.
National Securities terminated Colletti in October 2014 for “failure to disclose outside business activity to the firm,” according to his BrokerCheck history. He worked for two days at Securities America Inc. before it allowed him to “voluntarily resign” for failing to disclose his National Securities termination. Two weeks after he left Securities America, he worked at Cadaret, Grant, where he remained for two years before joining The Investment Center in January 2017.
Finra has recently said that that it will step up its regulation and examination of firms that chronically employ brokers with poor disciplinary records.