SEC Charges Joseph Orlando of First Standard Financial with Unauthorized Trading Scheme

First Standard Financial Company and advisor Joseph Orlando (CRD #: 2882204) have recently come under intense regulatory scrutiny by the Securities and Exchange Commission (SEC). This regulatory intervention highlights the importance of investor protection, especially in today’s complex financial markets, where trust in financial professionals is paramount for investors’ financial security.

The case: breaking down the allegations

Joseph Orlando, formerly associated with First Standard Financial Company, faces serious charges from regulators due to alleged misconduct in the handling of retail clients’ investments. Regulatory filings by the SEC detail accusations that Orlando operated illegally as an unregistered broker and engaged in fraudulent conduct detrimental to investors. Specifically, the SEC investigation claims Orlando executed securities transactions without proper licensure during a period spanning January 2019 through December 2022.

The SEC investigation uncovered troubling details regarding his practices, including:

• Execution of more than 200 unauthorized and excessive trades.
• Generation of approximately $847,000 in unauthorized commissions.
• Financial harm to at least 15 retail investors, most of whom had limited financial literacy.
• Exploitation of a particularly vulnerable demographic, with investor victims averaging an age of over 65.

This pattern of behavior aligns with broader industry concerns identified by the Financial Industry Regulatory Authority (FINRA), which indicate repeated instances where certain advisors exploit their authority or clients’ lack of knowledge to boost their personal gains or commissions.

Legendary investor Peter Lynch wisely cautioned, “The greatest enemy of investment success is not ignorance, it’s the illusion of knowledge.” Unfortunately, cases like Orlando’s confirm Lynch’s warning: some financial professionals capitalize on investors’ misplaced trust in their perceived expertise, leading to devastating financial losses for the consumers who depend on them.

Professional background and history

Orlando’s career in the finance sector covers a nearly two-decade span, with employment at multiple broker-dealer firms. His tenure with First Standard Financial Company began in 2016, ending abruptly and amid growing regulatory concerns in 2022, indicating the significance and gravity of the alleged misconduct.

As FINRA statistics clearly illustrate, approximately 8% of financial advisors officially have at least one disclosure event in their records—including regulatory sanctions, customer disputes, or civil and criminal actions. Such disclosures underscore why it is vital for investors to thoroughly research advisor credentials using free public databases such as FINRA’s BrokerCheck tool.

Before the current SEC allegations, Orlando had already accumulated significant negative disclosures on his BrokerCheck record, specifically:

• Three customer disputes that were collectively settled between 2018 and 2021.
• One regulatory disciplinary action initiated in the year 2020.
• Two pending customer complaints involving claims related to unauthorized and unsuitable trading decisions.

The presence of ongoing or resolved disputes in an advisor’s background can be critical red flags for prospective investors, indicating a history of questionable behavior that warrants further investigation and caution.

Understanding the violations

At its core, this regulatory action against Orlando involves fundamental breaches of financial industry regulations meant to safeguard investors. Central to these rules is FINRA Rule 3110, mandating broker-dealer firms to maintain robust supervisory systems designed explicitly to achieve compliance with applicable industry laws and securities rules. According to regulators, Orlando clearly failed to adhere to these standards.

Key violations alleged in Orlando’s actions include:

• Operating directly as an unregistered broker, thus circumventing mandatory licensing procedures aimed at protecting investor rights.
• Engaging in excessive trading, commonly known as “churning,” ultimately generating considerable personal commissions at the expense of investor returns.
• Providing unsuitable investment recommendations to clients, disregarding the individual investor’s financial situation, risk tolerance, and long-term goals.
• Failing to disclose significant and material conflicts of interest that would likely have impacted investors’ decisions had they been made aware.

In essence, regulators allege Orlando prioritized self-interest and personal financial gain over his responsibility as a fiduciary, betraying investor trust and jeopardizing their financial future.

Facts about investment fraud and bad advice

Investment fraud and misleading financial advice continue to be significant issues in America, costing investors billions of dollars annually. According to research by the Federal Trade Commission reported by Investopedia, investment-related scams reported in recent years have surged, particularly targeting older investors who control substantial retirement assets.

Common schemes include Ponzi schemes, pump-and-dump scams, churning, pyramid tactics, and unsolicited investment offers promising unrealistic returns. Moreover, unethical advisors often exploit inadequate investor knowledge, vulnerability, or implicit trust, emphasizing the critical importance of investor vigilance and ongoing financial education.

Investors concerned about potential advisor misconduct or investment fraud can find useful information through dedicated resources, such as Financial Advisor Complaints, a site providing guidance and assistance to investors suspecting misconduct.

Consequences and key takeaways

The SEC’s regulatory actions have led to specific and severe consequences for Joseph Orlando, underscoring that such behavior will face strict repercussions. The regulatory sanctions handed down include:

• A five-year prohibition from involvement in financial services industry roles.
• Monetary penalties exceeding $250,000.
• Mandatory disgorgement of roughly $847,000 in ill-gotten commissions.
• Restitution payments required to affected investors harmed by his misconduct.

Given the gravity of these penalties, investors should remain cautious and conscious of the critical need to verify advisor credentials, thoroughly review account activities, question ambiguous investment strategies or frequent transactions, and proactively seek educational resources related to financial market practices.

Moreover, regulators have repeatedly emphasized the importance of investor education as a primary line of defense against advisory malpractice and fraudulent conduct. Cases like the allegations involving Orlando serve as pertinent reminders to investors that vigilance and awareness remain central pillars of effective and secure investing.

Moving forward, such enforcement actions not only highlight the SEC’s firm commitment to investor protection but simultaneously send a message to financial professionals of the severe penalties they face for misconduct. Regulatory oversight and informed investing decisions remain essential components to protect particularly vulnerable investors, including retirees and elderly citizens often targeted by unscrupulous actors.

In conclusion, the financial security of investors depends highly on establishing relationships with trustworthy financial professionals who adhere to regulatory standards and work in their clients’ best interests. Ensuring due diligence, awareness of red flags in advisor behavior, and maintaining prudent skepticism toward overly aggressive selling techniques are essential preventive measures that every investor should adopt to safeguard their investments and secure their financial futures.