Capstone Financial Investment Advisor Barred By FINRA
David John Melilli, an ex-Cambridge Investment Research stockbroker, was barred by FINRA beginning November 8th, 2021. This came in the wake of allegations that he traded in multiple clients’ accounts without written authorization. This included trading in the account of one deceased person.
Without denying or admitting to FINRA’s findings, David Melilli consented to the sanctions and the entry of findings that he did not produce the information requested by the self-regulatory organization (SRO). The bar came after Melilli refused to cooperate.
After having worked for 11 years in the industry, Melilli appears to still be a registered investment advisor with Capstone Financial, LLC out of Moorestown. NJ. If you suffered losses while working with broker David Melilli, contact our investment fraud lawyers at Shepherd Smith Edwards and Kantas today.
FINRA’s Preliminary Investigation Found Multiple Rule Violations
As part of the SRO’s probe into the claims against Melilli, they found that the broker had committed multiple FINRA rule violations including those mentioned below:
- NASD Conduct Rule 2510(b) and FINRA Rules 3260(b), 2360(b)(18)(A), 2360(b)(18)(B) and 2010: Discretion in customer accounts without written authorization.
- FINRA Rules 4511 and 2010: Using text messages to conduct securities-related business.
- FINRA Rules 2210, 2220, and 2010: Sending written communication to customers without getting approval from the member firm first, as well as other matters.
- FINRA Rules 3210 and 2010: Setting up and keeping up outside securities accounts without the prior written consent of a member firm.
- FINRA Rules 4511 and 2010: Forging customer signatures on account documents and causing a member firm to keep books and records that were inaccurate.
- FINRA Rule 2010: Unauthorized trading in the account of a customer who has died.
David Melilli’s BrokerCheck Record Features Claims of Unsuitability, Negligence, and More
According to Melilli’s BrokerCheck record, the Capstone Financial investment advisor is facing investor claims that allege the broker acted negligently in their accounts. Along with unauthorized trading, the broker is facing claims of unsuitability, churning, and breach of fiduciary duty.
- September 2020: In this pending unauthorized trading case, clients are seeking $5K in damages.
- September 2020: This client accused Melilli of making risky investments that the investor didn’t fully understand. This customer also worried that management fees were not calculated properly. The claim was denied.
- February 2020: This client is seeking $140K in damages. Allegations include unsuitability, negligence, breach of fiduciary duty, fraud, and churning.
- January 2020: Broker-dealer Cambridge Investment Research fired Melilli after he allegedly made unauthorized trades.
Other firms where Melilli used to be registered include LPL Financial, SagePoint Financial, Janney Montgomery Scott, Morgan Stanley, Lincoln Financial Advisors, and Cambridge Investment Research Advisors.
Unauthorized Trading: Grounds For Filing a FINRA Arbitration Claim
Unauthorized trading involves a broker buying, selling, or exchanging securities without the advance permission or consent of the client.
Per FINRA rules, brokers must discuss all trades with an investor before making them unless they have been granted broker discretion to make these trades. To obtain this type of permission, the customer would have signed an agreement with the financial advisor and the firm acknowledging said consent.
There can be exceptions, such as when a customer possesses a margin account and its value drops under the broker-dealer’s requirements. In these instances, the broker may be able to sell securities for that customer without getting permission ahead of time.
Our unauthorized trading attorneys represent investors throughout the United States. If you were a client of David Melilli do not hesitate to seek legal advice for losses that occurred due to unauthorized trading. Contact SSEK Law Firm today at (800) 259-9010.