FINRA Sanctions Joseph J. Steward for Excessive and Unsuitable Trading

Joseph J. Steward, a registered representative with CRD No. 3241331, violated multiple FINRA rules by engaging in excessive and unsuitable trading in a customer’s account. According to FINRA, Steward willfully violated the Best Interest Obligation under Regulation Best Interest (Reg BI) and also violated FINRA Rules 2111 (Suitability) and 2010 (Standards of Commercial Honor). As a result, he received a five-month suspension and was ordered to pay $6,000 in restitution to the affected customer.

Steward began working in the securities industry in 1999. From April 2016 to August 2022, he was registered with Spartan Capital Securities, LLC. Since August 2022, he has remained registered with another FINRA member firm. As of the date of the AWC, Steward continues to work in the industry but is subject to suspension and statutory disqualification.

FINRA Rule 2111 requires brokers to ensure investment recommendations are suitable based on a customer’s financial situation, objectives, and risk tolerance. Regulation BI, which took effect in June 2020, expanded these obligations. Under Reg BI, brokers must act in the best interest of retail clients when recommending securities transactions or strategies, without placing their own interests first. For example, a broker should not recommend frequent trading that results in high commissions, nor suggest aggressive strategies to conservative investors.

According to FINRA, between October 2019 and October 2021, Steward recommended 76 trades to a 61-year-old attorney with an aggressive growth objective. These trades led to an annualized turnover rate of 32 and a cost-to-equity ratio of 142%—both far exceeding traditional red flags of 6 and 20% respectively. The customer paid $25,939 in commissions and suffered $24,568 in realized losses. Steward exercised de facto control over the account, and the volume and cost of trading were found to be excessive, unsuitable, and not in the client’s best interest. Consequently, Steward's conduct failed the Care Obligation under Reg BI and breached FINRA’s standards of fair dealing.

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.