Florida Broker Barred by SEC for Selling and Receiving Payments for Book of Business after Filing Bankruptcy PetitionThursday, August 27, 2020
On August 20, 2020, the Securities and Exchange Commission (SEC) released an Order Instituting Administrative Proceedings against investment adviser representative Stephen Pizzuti, a resident of DeBary, Florida.
Pizzuti has been associated with two member firms of the Financial Industry Regulatory Authority (FINRA) within the past ten years: Merrimac Corporate Securities, Inc. from January 2003 to May 2015 and Freedom Investors Corp. from December 2013 to March 2017. Both are located in Altamonte Spring, Florida, though FINRA expelled Merrimac in March 2016.
According to his FINRA BrokerCheck report, Pizzuti has numerous regulatory disclosures. In June 2012, Pizzuti consented to a three-month suspension and $10,000 fine to resolve allegations that he had violated FINRA Rule 2010 and NASD Rules 2110 and 3010 by allegedly failing to supervise outside business activities and private securities transactions of a relative and other registered representatives at Merrimac. The activities turned out to be a Ponzi scheme. In July 2013, Pizzuti consented to another three-month suspension and $15,000 in civil and administrative fines to resolve allegations of violating the same securities industry rules as previously mentioned by allegedly disseminating communications related to securities to the public that contained material omissions or misleading information through websites that he controlled. FINRA also claimed that Pizzuti was soliciting a subscription-based “stock analyzer” to identify stocks with the “highest alpha and strongest performance” but failed to provide a sound basis for making those claims. Finally, FINRA claimed in its Complaint that Pizzuti failed to properly supervise a Merrimac registered representative that he knew had forged numerous deposit securities request forms, which resulted in unregistered penny stocks deposited in the customers’ accounts without supervisory review.
The current Order involves Pizzuti’s bankruptcy proceedings, which were filed in October 2015. Pizzuti pled guilty to one count concealment of assets for failing to identify his book of business as an asset when he and his wife filed a joint Chapter 7 bankruptcy petition on November 5, 2019. Pizzuti sold his book of business from his time as a broker for $300,000 in November 2015. The Order states that Pizzuti lied under oath that he had not transferred or sold any assets other than what he had already disclosed in the bankruptcy petition even though he had received over $28,000 from the individual who bought his book of business over the course of a year. The SEC asserts that Pizzuti attempted to conceal these funds by receiving the payment in cash or wire transfer to bank accounts controlled by his wife and son. Pizzuti was sentenced to two years of probation and over $28,000 in forfeiture and restitution on January 13, 2020.
For the above reasons, the SEC deemed it appropriate and in the public interest to impose sanctions, including barring Pizzuti from associating with any broker dealer, investment adviser, or other related association with the securities industry. The SEC also barred Pizzuti from participating in any offering of a penny stock.
Many times, brokerage firms can be held liable if they failed to supervise a broker who committed misconduct while registered at their firm. If your broker gave you bad advice that cost you money, call us (1-877-410-8172) for a free consultation.