FINRA Suspends Broker Keith Dagostino for Alleged Best Interest Failures

The Financial Industry Regulatory Authority (FINRA) has issued a Letter of Acceptance, Waiver and Consent (AWC) against Keith M. Dagostino (CRD #2837860), resolving allegations that he made unsuitable investment recommendations to retired and senior investors in violation of Regulation Best Interest (Reg BI). According to FINRA, the alleged misconduct occurred between July 2020 and June 2023 and involved speculative, low-priced securities that were inconsistent with customers’ conservative investment profiles.

Alleged Unsuitable Recommendations and FINRA Sanctions

According to the AWC, FINRA alleges that Dagostino recommended speculative, low-priced microcap securities to 10 customers, all of whom were retired or senior investors. FINRA states that each of these customers had low risk tolerance and investment objectives focused on capital preservation and income. 

Despite those profiles, FINRA alleges that Dagostino recommended concentrated positions in speculative securities that made up between 35% and 94% of the value of each customer’s account. FINRA contends that these recommendations subjected customers to a substantial risk of loss and were not in their best interests under Reg BI’s care obligation. 

FINRA further alleges that the recommendations resulted in more than $1.8 million in customer losses. The firm later repaid the customers for those losses, but FINRA maintains that repayment does not negate the underlying alleged violations. 

As a result of this conduct, FINRA found that Dagostino willfully violated Reg BI and FINRA Rule 2010, which requires brokers to observe high standards of commercial honor and just and equitable principles of trade. In connection with these findings, FINRA imposed the following sanctions: 

• 24-month suspension from associating with any FINRA member firm in any capacity
• $25,000 fine
• Statutory disqualification during the suspension period
• Waiver of any claim of inability to pay the monetary sanction

Why This Matters for Investors

FINRA’s allegations in this matter highlight the risks that can arise when speculative, low-priced securities are recommended to investors with conservative objectives. Microcap securities often involve limited liquidity, heightened volatility and less publicly available information, which can make them particularly risky for retirees who rely on their investments for income and capital preservation.

The complaint also underscores the role concentration plays in magnifying losses. Even a single high-risk investment can have an outsized impact when it represents a large percentage of an account’s value. FINRA alleges that, in this case, customers were exposed to concentrated positions that were inconsistent with their stated risk tolerance and financial goals.

Reg BI was implemented to require brokers to act in a retail customer’s best interest by exercising reasonable diligence, care and skill when making recommendations. According to FINRA, the issues raised here reflect concerns about whether those obligations were met, particularly with respect to evaluating risk, suitability and the overall impact of recommendations on senior investors.

For investors, this case serves as a reminder to review account statements, understand how concentrated positions affect overall risk and ask questions when recommendations appear inconsistent with long-term financial objectives.

Talk to a Securities Attorney About Your Options

FINRA’s findings in this AWC were accepted without admissions, and the underlying allegations remain unproven. Even so, the case is a reminder that concentrated positions in speculative securities can carry outsized downside, especially for retirees and other investors with conservative goals.

If you were advised to invest heavily in low-priced or microcap stocks and those positions did not match your stated objectives, it may be worth reviewing your account records and recommendation history. That review can help clarify what was recommended, how the risk was explained, and whether your portfolio became overly concentrated.

Sonn Law Group represents investors nationwide in FINRA disputes involving unsuitable recommendations and related misconduct. We handle cases on a contingency-fee basis — you pay nothing unless we recover compensation for you.

Reach out to our team by calling 833-912-3000 or completing our online consultation form to request a confidential review.