Florida Broker Suspended for Improperly Exercising Discretion in Customer Account
Stephen Paul Florio (CRD #1186577) is a licensed securities broker and professional investment advisor. From May of 2009 to July of 2015, Mr. Florio worked at Morgan Stanley. Subsequently, he was a financial representative for Raymond James & Associates from 2015 to 2018. Now, Mr. Florio is employed by Cambridge Investment Research. At all firms, he was based in Fort Lauderdale.
On August 20th, 2020, the former Raymond James financial advisor was fined $5,000 and suspended for ten business days by FINRA for improperly exercising discretion in a customer’s trading account. Below, our Miami unauthorized trading lawyer provides an overview of the allegations and explains the key things investors should know about FINRA’s broker discretion.
Sanctions: Former Raymond James Broker Stephen Paul Florio
In the summer of 2018, Stephen Paul Florida was discharged by his member firm, Raymond James and Associates, after allegations of misconduct. Upon learning of the broker’s termination and in accordance with securities law regulations, the Financial Industry Regulatory Authority (FINRA) launched its own investigation into the potential misconduct by the representative.
After the inquiry, it was determined that Mr. Florio exchanged an email with a customer that suggested he was engaged in an unapproved, undisclosed outside business activity. Though, he was not cited for that violation by FINRA. However, regulators assessed that the financial advisor improperly exercised trading discretion within a client’s brokerage account based entirely on a verbal conversation. Industry rules are clear: Brokers must obtain express written authorization to exercise trading discretion.
Based on its findings, FINRA took disciplinary action against this financial representative. Mr. Florio was fined $5,000 and suspended from the securities industry for ten business days. Without admitting or denying any of the allegations, the broker consented to the penalties. Mr. Florio completed the suspension period in early October of 2020.
FINRA Regulation: Written Authorization Required for Discretionary Trading
Broadly speaking, there are two categories of brokerage accounts: Non-discretionary trading accounts and discretionary trading accounts. When you have a non-discretionary account, a financial advisor must get your express approval for each individual transaction—no matter how minor. Trades cannot be completed without permission from the customer. If a broker trades in your non-discretionary account without you knowing, they are violating your rights.
In contrast, with a discretionary account, a financial advisor can make individual trades that are consistent with a broader strategy. Under FINRA rules, brokers/brokerage firms must get written authorization from investors to do any discretionary trading. Failure to do so is a serious violation of the rules. Verbal authorization from an investor—as was allegedly obtained by this broker—is not enough to meet industry standards.
Call Our Miami Unauthorized Trading Attorney for Immediate Help
At Carlson & Associates, P.A., our Florida investor losses lawyers are skilled, results-driven representatives for clients. If you or someone you know suffered losses due to unauthorized trading, we are ready to offer guidance and support. Contact us now for a completely confidential investment fraud consultation. Our legal practice represents investors in South Florida and regions beyond.
Resource:
brokercheck.finra.org/individual/summary/1186577
