FINRA Alleges Spartan Registered Representative Nicholas J. Schiano of Serious Misconduct

Nicholas J. Schiano, a registered representative with Spartan Capital Securities, LLC, allegedly violated several key regulatory standards, according to a Letter of Acceptance, Waiver, and Consent (AWC) issued by FINRA. Between September 2017 and March 2022, Schiano recommended excessive and unsuitable trading to two senior retail customers. FINRA found that Schiano willfully violated the SEC’s Regulation Best Interest (Reg BI), and also violated FINRA Rules 2111 (suitability) and 2010 (standards of commercial honor). FINRA imposed a six-month suspension, a $5,000 fine, and ordered him to pay $55,770 in partial restitution.

Schiano began working in the securities industry in 2001 and registered with FINRA through Spartan Capital Securities, LLC in August 2017. At the time of the AWC, Schiano remained registered with Spartan Capital. His career history also included prior associations with other broker-dealers, but his most recent and relevant affiliation remained with Spartan. His FINRA CRD disclosures multiple customer disputes, as well as judgment/liens, which is a mark on a registered representative's reputation.

Regulation Best Interest (Reg BI) requires brokers and associated persons to act in the best interest of retail customers when making recommendations, avoiding placing their own interests ahead of the client’s. This includes the “Care Obligation,” which mandates that brokers use reasonable diligence, care, and skill to ensure a series of recommendations is not excessive. FINRA Rule 2111 (the suitability rule) similarly prohibits recommendations that are unsuitable for a customer, especially when brokers control or significantly influence an account. FINRA Rule 2010 requires members to observe high standards of commercial honor in their professional conduct. Two common indicators of excessive trading are: (1) a turnover rate of 6 or higher, and (2) a cost-to-equity ratio above 20%.

FINRA found that Schiano excessively traded the accounts of two elderly clients, both of whom had speculative investment objectives. In one account, Schiano executed 102 transactions between 2017 and 2022, generating an annualized turnover rate of 14 and a cost-to-equity ratio of 65%. The customer paid $40,515 in commissions and experienced $13,349 in losses. In a second account, shared with another broker, 31 trades generated a turnover rate of 18 and a cost-to-equity ratio of 76%, resulting in $30,510 in commissions and $48,895 in realized losses. FINRA determined that the frequency and cost of the trading far exceeded reasonable bounds and violated the customers’ best interests under Reg BI and Rule 2111.

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.