Charles Malico (Charles Vincent Malico CRD# 1507282) is a previously registered broker whose last known employer was Network 1 Financial Securities Inc. (CRD#:13577) of Huntington Station, NY. His previous employers include MidAmerica Financial Services, Inc. (CRD#:47351, expelled by FINRA on 5/10/2016), Global Arena Capital Corp (CRD#:16871, expelled by FINRA on 1/4/2016), B.B. Graham & Company, Inc. (CRD#:41533), all of Melville, NY. He has been in the industry since 1987.
After a customer’s requested for arbitration, FINRA followed up with its own review. In it, FINRA found that Malico engaged in violations of the Regulation Best Interest’s Care Obligation, set forth at Exchange Act Rule 15l-1(a)(2)(ii). Also known as Reg BI, it’s the standard by which brokers consider potential investments to recommend to their customers. Brokers must consider the customers’ investment profile and act in the customer’s best interest.
In the AWC letter, FINRA found that Malico engaged in excessive trading that would require a customer’s account to recognize an increase of 158% to break even. From July 2020 through November 2021, Malico made multiple recommendations that were excessive for his investment profile. The customer paid more than $54,000 in commissions and other trading costs resulting from Malico’s recommendations, losing more than $17,500. One tactic was to suggest to the customer that he sell a specific security, then re-buy it several days or weeks later. This “in-and-out” trading included shares for a biotechnology company.
In the Acceptance, Waiver & Consent Letter (AWC), Malico agreed to sanctions of:
- A suspension of six months
- A $5,000 fine
Malico was not required to pay restitution to the defrauded client since Network 1 Financial Securities previously compensated the client following an arbitration action through FINRA.
Other Customer Disputes
There are two pending customer disputes in Malico’s CRD. The first was filed on June 23, 2022, alleging “Suitability; Churning; Unauthorized Trading; Fraud in violation of Section 10(b) and 10b-5 of the Securities Exchange Act of 1934, Misrepresentation and Breach of Fiduciary Duty / Breach of Covenants of Good Faith Breach of Fair Dealing, Negligent Supervision: Breach of Contract; Unjust Enrichment; Lost Opportunity Damages; Punitive Damages; and Unsuitable Use of Margin.” The client requests damages of $130,000.
The second most recent was filed on 12/6/2022, alleging Negligence, Breach of Fiduciary Duty, Negligent Supervision, with requested damages of $65,000.
It is not obvious which of these two customer disputes are responsible for the FINRA review and subsequent suspension.
A previous customer filed a dispute on 9/10/2015, with allegations of churning, unsuitability, and breach of fiduciary duties, and requested damages of $99,990.00. In his rebuttal comments, Malico disputes the allegations, and explains why they were without merit. This claim is still listed as “pending.”
Three customer disputes dating back to 1990 have been settled, including one for “unauthorized trading” that led to damages granted of $44,370.00. This claim was filed with the National Association of Securities Dealers (NASD) with a decision rendered on 10/9/1995.
Malico has two liens: the first is a tax lien dated 9/2/2008 for $8,256.00, and the second is a civil lien dated 4/1/2002 for $9,499.87.
Did You Invest With Charles Malico?
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