Alleged Excessive Trading by Joseph L. Tranchina

According to the Financial Industry Regulatory Authority (FINRA), registered representative Joseph L. Tranchina engaged in excessive trading in the accounts of two retail customers between January 2018 and March 2022. FINRA found that Tranchina willfully violated Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934, and also violated FINRA Rules 2111 and 2010. As a result, FINRA imposed a five-month suspension, a $5,000 fine, and ordered restitution of $60,975 plus interest.

Tranchina began working in the securities industry in 2012. From August 2017 through November 2022, he was associated with Spartan Capital Securities, LLC. Since November 2022, he has remained a registered General Securities Representative with another FINRA member firm named Ceros Financial Services.

FINRA Rule 2111 requires brokers to recommend only suitable transactions based on a customer’s investment profile. After June 30, 2020, Regulation BI replaced that rule for retail customers. Reg BI’s “Care Obligation” requires brokers to act in the best interest of the customer, considering the customer's financial profile, and to avoid excessive trading. Two examples of violations include (1) recommending frequent, costly trades in an account that cause substantial losses; and (2) generating commissions through high-volume transactions without considering whether the trades are suitable or beneficial for the client.

FINRA determined that Tranchina’s trading caused high turnover rates and excessive costs. For example, in one account held by a 65-year-old judge, Tranchina recommended 43 trades over a 17-month period, generating an annualized turnover rate of eight and a cost-to-equity ratio of 32%. The account lost $74,331 while generating $49,645 in commissions. In another case, involving a 54-year-old small business owner, the turnover rate was 21 and the cost-to-equity ratio exceeded 90%, with $23,818 in realized losses and $11,330 in commissions. FINRA concluded that Tranchina’s trading was not in the best interest of these customers and breached both suitability standards and high ethical conduct obligations.

Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.

The content on this site reflects personal opinions and does not constitute statements of fact. No findings have been made against the firms or individuals mentioned. This blog is intended solely for educational purposes, drawing on publicly available information to provide general insights and a basic understanding of the law. It is not a substitute for legal advice.