Douglas Rosenberg and Adam Maggio, brokers who currently work for and previously worked for Joseph Stone Capital, respectively, have been suspended. Both have been accused of churning accounts by customers.
Douglas Rosenberg (Douglas Jarrett Rosenberg CRD# 3214215) is a registered broker currently registered with Joseph Stone Capital L.L.C. (CRD#:159744) of Mineola, NY. His previous employers include First Midwest Securities, Inc. (CRD#:21786) of Hauppauge, NY, Newbridge Securities Corporation (CRD#:104065) of Farmingdale, NY, and Securities Service Network, Inc. (CRD#:13318) of Knoxville, TN. He has been in the industry since 2000.
Rosenberg allegedly committed churning in three customer accounts between June 2017 and May 2020. Following these churning allegations, FINRA opened an investigation into Rosenberg’s business practices, leading to the discovery of excessive trading and churning of the customer accounts.
As part of the FINRA suspension and sanctions, Rosenberg was ordered to pay a total of $25,000 in partial restitution to the three customers in the following amounts:
- Customer #1, $5,058
- Customer #2, $16,032
- Customer #3, $3,910
Rosenberg was also suspended for seven months from any affiliation with any FINRA member broker after signing an Acceptance, Waiver & Consent (AWC) letter on 11/30/2021, and signed by FINRA legal counsel on 12/1/2021. No monetary sanctions or fines were levied against Rosenberg. His suspension began on 1/3/2022 and ends on 8/2/2022.
A previous civil lien was added to Rosenberg’s record on 6/11/21 for $45,068.01. No additional information is available.
A customer dispute filed on 5/6/2013 alleged “excessive & unnecessary trading on margin with no downside protection, false & misleading statements, fraud, negligent misrepresentation, breach of fiduciary duty & breach of the covenants of good faith and fair dealing, negligent supervision, breach of conduct.” The client requested damages of $100,000, and the claim was settled for $25,000.
Nine months prior, a client dispute filed on 7/31/2012 indicating violations of The Texas Securities Act 581-33. Although the dispute was filed against First Midwest Securities, for whom Rosenberg worked at the time, he is not involved in the arbitration.
However, the next dispute, filed on 5/14/2008, indicated a verbal claim by the client of unauthorized trades in his account. The client requested damages of $5,000, and the claim was settled for $17,500.
Adam Maggio (CRD#: 4177365) is a registered broker currently registered with VCS Venture Securities (CRD#:127921) and Joseph Stone Capital L.L.C. (CRD#:159744) of Mineola, NY. His previous employers include First Midwest Securities, Inc. (CRD#:21786) of Garden City, NY, J.P. Turner & Company, L.L.C. (CRD#:43177) of Westbury, NY, and Brundyn Securities Inc. (CRD#:124493) of Arlington, TX. He has been in the industry since 2002.
Maggio has a total of seven disclosures in his CRD. The most recent is a customer dispute filed on 1/3/2022 with a range of allegations, including churning, failure to supervise, unauthorized trading, breach of contract, among others. The client requests damages of $2,087,663.24. Maggio denies all allegations. This claim is currently pending.
A FINRA arbitration resulted after Maggio was found to have failed to properly supervise trading in several customer accounts at Joseph Stone Capital from January 2015 to June 2020. Not only did Maggio fail to notice specific red flags associated with excessive trading, he failed to act upon them. After Maggio was provided with notification of these red flags, he failed to put a stop to the activity.
One issue was with “active account reports” that indicated these flagged accounts with high commission in the account’s-to-equity ratios. Rather than review the reports in the firm’s online portal, Maggio relied on his own manual calculations to determine which accounts were being traded excessively. On several occasions, Maggio’s manual method failed to identify accounts with excessive trading.
From January 2015 through November 2017, Joseph Stone made these exception reports available to Maggio as well as other supervisors via the firm’s online portal. Even after reviewing the firm’s exception reports, Maggio still did not respond to the red flags in the reports.
In some cases, Maggio restricted commissions that brokers could charge on individual trades, but not the commissions and aggregate costs that were charged to the accounts that were impacted. This allowed the brokers to do more frequent trading and continuing to charge customers aggregate commissions. Additionally, Maggio failed to restrict commissions on some trades where there was a gain without regard to the total amount of commissions that were being charged.
Maggio signed an Acceptance, Waiver & Consent (AWC) letter agreeing to the following sanctions:
- A fine of $5,000
- A five-month suspension, beginning 1/3/2022 and concluding 6/2/2022
- A requirement of 20 hours of supervisory continuing education by a FINRA—approved vendor
A previous customer dispute filed on 4/5/2010 included allegations of “excessive trading, unsuitability, misrepresentation, excessive commission, negligence, breach of fiduciary relationship and fraud.” The client requested damages of $575,000.00, and the claim was settled for $43,750.00. No additional information is available.
Just a year before, a prior customer dispute filed on 3/9/2009 contained similar allegations of “unsuitable and unauthorized trading.” The customer requested damages of $150,000 and the claim was settled for $14,999.99. No additional information is available.
Did You Invest With Joseph Stone Capital?
Silver Law Group is investigating the commissions and markups that Joseph Stone Capital has charged. Our investigation shows that many investors have been charged an additional fixed commission plus other charges on trades made through COR Clearing, Joseph Stone Capital’s clearing firm.
FINRA has fined broker-dealers for mischaracterizing commission charges as handling service fees. Even small commission fees and markups can lead an investor to pay significant money over time. The cost of the fees and excessive trading can lead investors to bring claims for churning or unsuitability.
Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.