Tr?id=566623520170033&ev=PageView&noscript=1

ÍøÆØ³Ô¹Ï

FINRA Takes Action Against Advisor for Violating Regulation Best Interest

Posted on April 9th, 2024 at 3:46 PM
FINRA Takes Action Against Advisor for Violating Regulation Best Interest

From the desk of Jim Eccleston at ÍøÆØ³Ô¹Ï

The Financial Industry Regulatory Authority (FINRA) has sanctioned a former advisor at Network 1 Financial Securities for breaching Regulation Best Interest (Reg BI) through excessive trading in a client's account.

As reported by ThinkAdvisor, Charles V. Malico was suspended for six months and fined $5,000 for his actions. Additionally, FINRA imposed a $200,000 fine on Network 1Financial Securities and ordered restitution of $533,587 plus interest for the firm's failure, along with its Chief Compliance Officer, to establish adequate supervisory procedures to ensure compliance with Reg BI.

From July 2020 to November 2021, Malico allegedly violated the Reg BI obligation by recommending numerous transactions in a client's account that were deemed excessive, given the client's investment profile. Despite the client being a 63-year-old tax preparer with modest financial resources, Malico advised over 350 trades in the account, resulting in excessive commissions and trading costs exceeding $54,000.

According to ThinkAdvisor, Malico's recommendations involved frequent buying and selling the same securities within short time frames, exacerbating the client's losses while generating substantial commissions for himself and Network 1. For instance, he advised the client to buy and sell shares of a biotechnology company on six occasions within six months, resulting in significant financial detriment to the client.

The cumulative effect of Malico's actions led to an annualized cost-to-equity ratio exceeding 158 percent, making it exceedingly challenging for the client to achieve profitability. The client suffered losses exceeding $17,500 during the relevant period due to Malico's recommendations.

 

ÍøÆØ³Ô¹Ï LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

Hiring ÍøÆØ³Ô¹Ï has been one of the best career decisions I have made and this "investment" to maintain my sterling regulatory record has been returned many times over.  If you are in a situation where you've been unfairly accused, don't hesitate to talk with ÍøÆØ³Ô¹Ï. They are the best.

Thomas C.

LATEST NEWS AND ARTICLES

1778171646 Law
May 7, 2026
FINRA Bars Former Raymond James Broker for Refusing Testimony in Unauthorized Trading Probe

A former registered representative with Raymond James has been barred from the securities industry after refusing to cooperate with a Financial Industry Regulatory Authority (FINRA) investigation into alleged unauthorized trading activity.

1778084309 Law
May 6, 2026
FINRA Outlines Key Rulemaking Priorities and Recent Developments in Quarterly Agenda

The Financial Industry Regulatory Authority (FINRA) recently released its Quarterly Regulatory Policy Agenda, offering a detailed view of its rulemaking priorities, pending proposals, and recently approved regulatory changes.

1778000603 Law
May 5, 2026
Commonwealth Financial Network Resolves SEC Conflict of Interest Case

Commonwealth Financial Network has agreed to pay $5 million to resolve a long-standing conflict of interest case brought by the Securities and Exchange Commission, according to reporting by ThinkAdvisor.