The allegations read: Labarbera was named a respondent in a finra complaint alleging that he, with his member firm and other firm representatives, excessively traded and churned customers' accounts. The complaint alleges that the misconduct should have quickly drawn scrutiny, and been stopped, because cost-to-equity ratios were often over 100 percent; turnover rates were often over 100; there were extraordinary amounts of in-and-out trading; customer accounts were highly margined and often concentrated in one security; there were large numbers of transactions in which the total commission/markup per trade exceeded three percent and, in many instances, exceeded four percent; there was a deceptive mix of riskless principal and agency trading in numerous accounts, namely, higher cost trades in which markups almost always exceeded three percent (and generally exceeded $1,000 per trade) were executed on a riskless principal basis whereas lower cost trades, typically involving sales of the same securities, were executed on an agency basis; inverse and/or leveraged exchange traded funds (etfs) and exchange traded notes (etns) remained in accounts for multiple trading sessions; solicited trades were inaccurately characterized as unsolicited; and nearly all of the customer accounts at issue exhibited large losses. The trading was excessive in light of, and inconsistent with, the customers' investment objectives and financial situation. Labarbera, the firm and the other representatives engaged in a manipulative, deceptive and fraudulent scheme by churning the accounts of customers. They acted with intent to defraud and/or with reckless disregard of their customers' interests by seeking to maximize their own remuneration in disregard of the interests of their customers and as a result, willfully violated section 10(b) of the securities exchange act of 1934 and rule 10b-5 thereunder, finra rules 2010 and 2020, and nasd rules 2110 and 2120. The complaint also alleges that labarbera recommended transactions involving leveraged and/or inverse exchange traded products (etps) to customers. Labarbera lacked reasonable grounds for believing that these risky and speculative securities were suitable for the customers and that the customers understood and were willing to assume the risks particular to these securities. Labarbera mischaracterized solicited trades as "unsolicited," thereby causing the firm's books and records to be inaccurate.
