Charles Vincent Malico, Formerly of Network 1 Financial Securities, Suspended by FINRA Following Allegations of Excessive Trading

INVESTORS: Former Network 1 Financial Securities broker Charles Vincent Malico was barred by FINRA following allegations he excessively traded in customer accounts.

Charles Vincent Malico (CRD: 1507282) was registered as a broker with Network 1 Financial Securities from 2016 until 2022. Malico was previously registered as a broker with MidAmerica Financial Securities from 2014 until 2015. 

Malico has eleven disclosures on his BrokerCheck report. Four of Malico’s disclosures occurred before 2000. Two disclosures relate to personal financial matters of Malico.

October 2022 Regulatory Judgment

Status: Final

Initiated By: FINRA

Allegations: Without admitting or denying the findings, Malico consented to the sanctions and to the entry of findings that he willfully violated the Best Interest Obligation under Rule 15l-1 of the Securities Exchange Act of 1934 (Regulation Best Interest or Reg BI) by recommending a series of transactions in a retail customer’s account that was excessive in light of the customer’s investment profile. The findings stated that the trades that Malico recommended in the customer’s account resulted in an annualized cost-to-equity ratio exceeding 158 percent – meaning that the customer’s account would have had to grow by more than 158 percent annually just to break even. Malico’s recommendations caused the customer to pay more than $54,000 in commissions and other trading costs, and made it virtually impossible for the customer to realize a profit. In fact, the customer lost more than $17,500 as a result of Malico’s recommendations.

Resolution: Acceptance, Waiver & Consent (AWC)

Sanctions: Civil and Administrative Penalty(ies)/Fine(s)

Amount: $5,000.00

Sanctions: Suspension

Registration Capacities Affected: All Capacities

Duration: Six Months

Start Date: 10/17/2022

End Date: 2/16/2023

Sanctions: The AWC does not require that Malico pay restitution to the customer because his member firm has already compensated the customer in connection with the settlement of an arbitration claim filed by the customer.

December 2021 Customer Dispute

Status: Pending

Allegations: Negligence, Breach of Fiduciary Duty, Negligent Supervision,

Damage Amount Requested: $65,000.00

September 2015 Customer Dispute

Status: Pending

Allegations: Churning, unsuitability, breach of fiduciary duties.

Damage Amount Requested: $99,990.00

Broker Comment: October 13, 2015 To Whom it May Concern, I Charles Malico (CRD #: 1507282) have been conducting business with [customer] since approximately January 2011. [customer] opened an account at MidAmerica Financial Services, Inc. in September 2014. At that time he opened an account as a speculative investor. [customer] signed the New Account Form to reflect speculation and active trading, along with a signed Margin Agreement. [customer] was sent updated paperwork on February 24, 2015, to confirm his Risk Tolerance and Investment Objective. Again, [customer] signed and returned the updated paperwork the same day. This again confirmed that [customer] was fully aware of his Investment Objective. Prior to his account at MidAmerica, [customer] was a client of mine from approximately January 2011. From that time [customer] followed me from Global Arena Capital Corp, to Liberty Partners, to B.B. Graham & Co. back to Global Arena Capital Corp and finally to MidAmerica Financial Services, Inc. During those 4 years [customer] discussed in detail how his other portfolios were performing. He often compared me to be other brokers, continuingly telling me he had extensive experience, including option trading. He told me on many occasions that he was a sophisticated investor. [customer] stated on more than one occasion that he traded options at J.P. Turner. He questioned me as to why we did not trade options in his account at MidAmerica Financial Services, Inc. Again, this confirmed that [customer] was an experienced and active trader. [customer] started trading on Margin at MidAmerican Financial Serv. Inc. in September 2014, he was fully aware that account was held on margin as his account was held on margin at Global Arena Capital Corp. I discussed all trades with [customer] prior to execution. We spoke on a regular basis, an estimated 3 to 4 times a week, our conversations ranged from discussing trades, his overall account status to sporting events. On each trade [customer] received a confirmation, confirming his transaction. [customer] never questioned or complained about his account being on margin. [customer] signed his complaint with Finra on June 30, 2015. However, [customer] never informed me of his complaint, and during the time period from June 30 until August 28, during that time, prior to all trade executions, [customer] approved approximately 25 transactions in his account. In addition [customer] has signed 2 activity letters dated December 3rd, 2014 and February 13, 2015. On May 18th, 2015, my supervisor contacted [customer] to discuss his account. At that time [customer] did not disclose any problems or dissatisfaction with his account or Mr. Malico. All [customer’s] allegations are without merit. Sincerely Charles Malico MidAmerica Financial Services, Inc. Registered Representative Phone #: 631-815-5020.

January 2008 Customer Dispute

Status: Settled

Allegations: Unauthorized Trades

Damage Amount Requested: $8,935.00

Settlement Amount: $3,645.76

September 2000 Customer Dispute

Status: Settled

Allegations: Alleged unauthorized trading

Damage Amount Requested: $29,815.00

Broker Comment: Client sent me a letter, for my eyes only, stating that he was having trouble keeping track of his trades. He wanted a list of them. There was one trade he authorized prior to going on vacation. When he got back and saw the confirmation, he could not remember the trade. After I spoke with him, he remembered and told me to ignore the fax. When I left the firm, I left the letter in my desk. Without knowing the circumstances of the letter, the compliance department read unauthorized trade into the letter. It was not a complaint. It was a letter from a client to his rep. He never alleged unauthorized trading.

The Sonn Law Group is currently investigating allegations surrounding Charles Vincent Malico. We represent investors in claims against negligent brokers and brokerage firms. If you or your loved one experienced investment losses, we are here to help. For a free consultation, please call us now at 866-827-3202 or complete our contact form.