Joao Pinto Sanctioned over High Frequency Trading

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Joao Pinto (CRD# 6298233), a broker registered with Spartan Capital Securities, recommended unsuitable transactions in a retired customer’s account, according to a recent disciplinary action. MDF Law is currently investigating the New York City-based financial professional for allegations of similar conduct. We encourage investors with concerns to contact us immediately.

To learn more about the recent sanction against Mr. Pinto, continue reading this post. The below information is sourced from his BrokerCheck profile, a Financial Industry Regulatory Authority (FINRA) record accessed on December 20, 2023. 

Sanction Alleges “Excessive, Unsuitable” Trading in Retired Customer’s Account

FINRA filed an enforcement action against Mr. Pinto on November 21, 2023. According to a Letter of Acceptance, Waiver, and Consent (# 2018056490307), he made quantitatively unsuitable trades in the account of a retired 68-year-old customer between January 2020 and June 2021. According to FINRA’s findings, Mr. Pinto “Pinto recommended high frequency trading in the customer’s account, and the customer routinely followed his recommendations.” As such, per the AWC Letter, he held “de facto control” over the accounts. He allegedly used this control to execute 130 trades, generating total costs of $92,237—a figure that includes $83,484 in commission payments.

In addition to these costs, FINRA found, his trades allegedly resulted in realized losses totaling $141,051. They also caused an annualized turnover rate of 14, as well as an annualized cost-to-equity ratio of 55 percent. FINRA explains that this latter figure means that “the customer’s account would have to grow by 55% annually just to break even.” Accordingly, FINRA concluded that the trading “was excessive, unsuitable,” and not in the customer’s best interest.

Trades Allegedly Violated Suitability Rules

According to FINRA, the alleged unsuitable trades violated FINRA Rule 2111, requiring that brokers have a reasonable basis to believe their recommendations are suitable. It also found that they violated Regulation Best Interest, requiring brokers to make recommendations that are in their retail customers’ best interests. Violations of these rules are also violations of FINRA Rule 2010. Under this rule, brokers must “observe high standards of commercial honor and just and equitable principles of trade” in the course of their business.

FINRA Suspended Joao Pino for 3 Months

Based on these findings, FINRA suspended Mr. Pinto from associating with any member firm for a period of three months. His suspension began on December 18, 2023 and will end on March 17, 2024. 

Pending Dispute Alleges Churning, Seeks 6-Figure Damages

On October 27, 2022, an investor lodged a dispute involving Mr. Pinto. The dispute alleges that he misrepresented and omitted material information regarding equity investments, engaged in negligence, churned investments, and failed in a supervisory capacity. The dispute, which remains pending, seeks $268,386 in damages.

Mr. Pinto issued a “Broker Comment” in which he “strongly denies” the allegations. According to this statement, the claimant “was an active and knowledgeable [participant] in the decision making and authorized every transaction.” He asserted that the claimant knew about the risks and the commissions, concluding that the complaint was in bad faith.

FINRA: Pinto Based in New York City

Joao Pinto started his career as a broker in 2014, when he joined Newbridge Securities Corporation in New York City. He remained at the firm until 2019, when he left for Benchmark Investments. Less than a year later, he departed Benchmark for Spartan Capital Securities. He has been registered with Spartan’s New York City office ever since. With nine years of experience as a broker, he has completed four industry exams. 

Unsuitable Investments in Your Account? Call MDF Law Today

Have you lost money on investments recommended by Joao Pinto? You may be able to file a FINRA arbitration claim to pursue the recovery of losses. If your broker recommended transactions that exceeded your risk tolerance or conducted unapproved trades, call MDF Law. Our team of investment fraud attorneys has years of experience securing millions in recoveries for the victims of investment fraud. To chat with our team for free today, call 800-767-8040.

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