FINRA fines broker for violating municipal rules

A former registered securities general representative has agreed to pay $10,000 to settle charges from the Financial Industry Regulatory Authority that he violated Municipal Securities Regulatory Commission rules when he exercised his discretion over a client’s account without first obtaining their written consent.

Michael G. Mancinelli, who is no longer registered with a FINRA member firm, agreed to pay fine and be subject to a 30 business day suspension of association with a FINRA member firm in any capacity.

In doing so, Mancinelli neither admitted nor denied FINRA’s findings that he violated MSRB rules G-8 on discretionary trading and G-17 on fair use.

From February 2017 to October 2018, Mancinelli was registered as a General Securities Representative through New York-based Dinosaur Financial Group, LLC. Meanwhile, FINRA found that Mancinelli was engaging in discretionary trading on a client’s account without first obtaining the client’s written authorization or Dinosaur’s written approval to do so.

Although Mancinelli is no longer associated with a FINRA member firm, FINRA retains jurisdiction over him pursuant to its articles of association.

FINRA also found that from February 3, 2017 through December 31 of the same year, Mancinelli incorrectly marked municipal securities transactions in the same client account as unsolicited, which FINRA said rendered the books and records of Inaccurate dinosaur.

In order to exercise discretionary power or authority for discretionary accounts, MSRB Rule G-8 requires brokers and dealers to retain written authorization from clients.

Under MSRB Rule G-17, brokers, dealers, and municipal securities dealers must deal fairly with customers. Failure to obtain written authorization for discretionary trading is a failure to treat fairly and, therefore, considered a violation of G-17.

According to FINRA, during a seven-month period, Mancinelli executed about 460 municipal securities trades for a single client.

“For many of these transactions, Mancinelli exercised its discretion without obtaining written authorization from the client to exercise its discretion in this account,” FINRA found.

FINRA noted that at Dinosaur’s request, Mancinelli ultimately obtained a written and signed discretionary authorization from the client.

Regarding FINRA’s conclusion that Mancinelli caused Dinosaur to keep inaccurate books and records, FINRA pointed to more than 800 municipal securities purchase and sale transactions, for the same client, that Mancinelli allegedly marked as unsolicited.

This happened, according to FINRA, even though Mancinelli had actually recommended many buy and sell trades for the client.

As a result, FINRA found that Mancinelli also violated MSRB Rule G-8 and imposed a fine and penalties of $10,000.

FINRA records show that after leaving
Dinosaur, Mancinelli was registered with the New Jersey-based Celadon Financial Group until February 2020, but has not been registered as a broker since. He could not be reached for comment.