As a former financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of cases where advisors have taken advantage of their clients. The recent allegations against Angelo Piccone, a former Pittsford, New York financial advisor, are a prime example of the serious consequences that can result from such misconduct.
The Seriousness of the Allegations
According to a Letter of Acceptance, Waiver, and Consent (No. 2022076855802) issued by FINRA, Angelo Piccone allegedly recommended that a customer invest a staggering 77% of her net worth in speculative alternative investments while he was a representative of IBN Financial Services. FINRA states that this recommendation was not in the customer’s best interest and constituted a willful violation of the Regulation Best Interest and FINRA Rule 2010.
The investments in question were GWG L bonds, which FINRA describes as unsecured and unrated bonds. GWG’s own offering materials warned that these bonds:
- Could be considered speculative
- Involved a high degree of risk
- Were illiquid
- Were only suitable for persons with substantial financial resources and no need for liquidity
In 2022, GWG defaulted on its obligations to L Bond investors, suspended sales of further bonds, and filed for bankruptcy. This case highlights the importance of thoroughly understanding the risks associated with any investment and the need for advisors to always prioritize their clients’ best interests.
Piccone’s Background and Past Complaints
Angelo Piccone‘s BrokerCheck report reveals multiple investor complaints. In 2023, a complaint alleged that he recommended an unsuitable investment while representing IBN Financial Services. The complaint settled for $63,000 in 2024.
Previous complaints in 2017 and 2018 also alleged unsuitable investment recommendations and other misconduct, resulting in settlements of $20,000 each. These past complaints suggest a pattern of questionable practices by Piccone.
As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” It’s crucial for investors to work with advisors who prioritize their clients’ needs and have a clean professional record.
Understanding FINRA Rules and Consequences
FINRA, the Financial Industry Regulatory Authority, is responsible for regulating the conduct of financial advisors and firms. FINRA Rule 2010 requires advisors to observe high standards of commercial honor and just and equitable principles of trade. Piccone’s alleged misconduct violated this rule, leading to his suspension and sanctions.
Additionally, FINRA found that Piccone used his mobile phone to text with the customer, making unbalanced, promissory, and misleading statements about the prospects for recovery related to one of her investments. This use of an unapproved communication channel caused his firm to maintain inaccurate books and records, violating securities law and FINRA rules.
According to a study by the University of Chicago, approximately 7% of financial advisors have misconduct records. While this may seem like a small percentage, it underscores the importance of thoroughly vetting any potential advisor before entrusting them with your financial future.
Lessons Learned and Protecting Your Investments
The case of Angelo Piccone serves as a cautionary tale for investors. It’s essential to:
- Research your financial advisor’s background and disciplinary history
- Understand the risks associated with any recommended investments
- Ensure that your advisor prioritizes your best interests
- Regularly review your investments and ask questions if something seems amiss
By staying informed and vigilant, investors can help protect themselves from falling victim to misconduct by unscrupulous advisors. Remember, if an investment seems too good to be true, it probably is.
If you believe you’ve been the victim of financial advisor misconduct, don’t hesitate to seek legal counsel. Holding advisors accountable for their actions is crucial for maintaining trust and integrity in the financial industry.
