John Sebastion Cangialosi, Formerly of SW Financial, Named in Customer Dispute Alleging Churning and Unauthorized Trading, Among Other Misconduct

INVESTORS: Former SW Financial broker John Sebastion Cangialosi is facing a customer dispute alleging churning, excessive commissions, unauthorized trading, unsuitability, negligence, breach of contract, and fraud

John Sebastion Cangialosi (CRD#: 3273820) was registered as a broker with SW Financial from 2019 until 2022. Previously, Cangialosi was registered as a broker with Worden Capital Management from 2016 until 2019.

Cangialosi has fourteen disclosures on his BrokerCheck report. Three customer disputes filed against Cangialosi were closed with no action taken. One disclosure relates to a personal financial event.

March 2022 Customer Dispute

Status: Pending

Allegations: Churning, excessive commissions, unauthorized trading, unsuitability, negligence, breach of contract, fraud

Damage Amount Requested: $1,281,156.00

Broker Comment: Rep denies any wrongdoing and will vigorously defend this action. This is a mass claim filed by over 50 unrelated customers who were solicited by the notorious non-attorney group CSAG, which promises recoveries to unsuspecting investors and then extorts money out of innocent brokers and their firms by filing frivolous claims and trying to force settlements in order to avoid expensive litigation. Of the over 50 customers in this claim, I was only associated with 6 of the customers at some point in time. This claim involves experienced and affluent investors who sought to speculate with some of their assets in the hopes of achieving stock market gains – when they were unsuccessful, they were told by CSAG that they could illegitimately recover their market losses. These are false claims, and I will seek all damages and costs as a result of having to unnecessarily defend them.

August 2021 Regulatory Judgment

Status: Final

Initiated By: Maryland Division of Securities

Allegations: Cangialosi entered into an AWC, consenting to a nine-month suspension and payment of a $7500 fine, restitution of $221,622 for engaging in excessive and unsuitable trading, resulting in collective realized losses of $405,255 and trading costs of $311,229.

Resolution: Stipulation and Consent 

Sanctions: Censure

Sanctions: To withdrew his registration and not to reapply as an agent or investment adviser representative with the State of Maryland.

Broker Comment: Consented to withdraw his registration with the State of Maryland and not to reapply as an agent or investment adviser.

August 2021 Regulatory Judgment

Status: Final

Initiated By: FINRA

Allegations: Without admitting or denying the findings, Cangialosi consented to the sanctions and to the entry of findings that he engaged in quantitatively unsuitable trading in three customer accounts. The findings stated that Cangialosi recommended high frequency trading in the accounts, with each customer often holding concentrated positions in one or two securities for short periods of time. Cangialosi’s customers routinely followed his recommendations and, as a result, he exercised de facto control over the accounts. Cangialosi’s trading also resulted in high turnover rates and cost-to-equity ratios as well as significant losses. Cangialosi’s trading in the customers’ accounts was excessive and unsuitable given the customers’ investment profiles. As a result, the customers suffered collective realized losses of $405,255, while paying total trading costs of $311,229, including commissions of $292,657.

Resolution: Acceptance, Waiver & Consent (AWC)

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

Amount: $7,500.00

Sanctions: Restitution

Amount: $271,622.00

Sanctions: Suspension

Registration Capacities Affected: All Capacities

Duration: Nine months

Start Date: 9/7/2021

End Date: 6/6/2022

January 2018 Customer Dispute

Status: Settled

Allegations: Churning/quantitative suitability; unsuitable investments; unauthorized trading; negligence; breach of fiduciary duty; and, breach of contract.

Damage Amount Requested: $386,279.09

Settlement Amount: $30,000.00

Broker Comment: I vehemently deny all allegations made in this claim, however the client and I determined that it would be in our best interest to settle this dispute.

January 2016  Regulatory Judgment

Status: Final

Initiated By: Michigan

Allegations: The Administrator intends to deny the securities agent registration application of JOHN S. CANGIALOSI, under section 412(1) of the Act, MCL 451.2412(1), because Applicant engaged in dishonest and unethical practices within the last 10 years, which supports the denial of his registration application under the above-cited provisions of the Michigan Uniform Securities Act (2002), 2008 PA 551, MCL 451.2101 et seq.

Resolution: Withdrawn

Sanctions: Stipulation and Order for Withdrawal. Applicant does not intend to apply for registration under the Act in Michigan in the future. If Applicant does apply to become an investment adviser representative or securities agent in Michigan in the future, he agrees to waive any assertion or claim that MCL 451.2412(9)’s one-year time limit on the Administrator’s action after knowledge of material facts bars the Administrator from using the facts set out in the January 29, 2016 Notice of Intent to Deny Application when considering future applications.

November 2015 Customer Dispute

Status: Settled

Allegations: Statement of Claim alleges: Fraudulent and Negligent Acts, Breach of Contractual Requirements, Churning, Unsuitability, and Negligent Misrepresentation.

Damage Amount Requested: $100,000.00

Settlement Amount: $9,999.00

Broker Comment: This claim was settled for nuisance value to avoid the much higher cost and uncertainty of arbitration. The settlement was jointly paid by myself and another representative. We maintain that the claimant’s allegations are without merit, that the actual losses in the account of approximately $6,000 were attributable to market losses, and that neither I nor the other representative committed any misconduct.

February 2015 Customer Dispute

Status: Settled

Allegations: Customer, through counsel, alleges that “respondent’s” breached a contract, engaged in fraud, breached their fiduciary duties, and were otherwise negligent resulting in damages of $250,000.

Damage Amount Requested: $250,000.00

Settlement Amount: $50,000.00

Broker Comment: Registered representative, John Cangialosi’s statement: “This sophisticated customer carefully reviewed and authorized every trade in his account. All transactions were suitable and in accordance with this customer’s wishes. These are false claims of wrongdoing by a customer seeking only to improperly recoup his own losses.

April 2013 Regulatory Judgment

Status: Final

Initiated By: FINRA

Allegations: FINRA Rules 1122 and 2010, NASD Rule 2110, and Interpretive Material 1000-1: Cangialosi failed to disclose, and in some instances to timely disclose on his uniform application for securities industry registration or transfer (Form U4) six unsatisfied judgments and/or liens.

Resolution: Acceptance, Waiver & Consent (AWC)

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

Amount: $5,000.00

Sanctions: Suspension

Registration Capacities Affected: Any Capacity

Duration: Three months

Start Date: 5/20/2013

End Date: 8/19/2013

Regulator Statement: Without admitting or denying the findings, Cangialosi consented to the described sanctions and to the entry of findings, therefore he is fined $5,000 and suspended from association with any FINRA member in any capacity for three months. The suspension is in effect from May 20, 2013, through August 19, 2013. Fine paid in full on December 31, 2013.

Broker Comment: Without admitting or denying the findings, Cangialosi consented to the described sanctions and to the entry of findings, therefore he is fined $5,000 and suspended from association with any FINRA member in any capacity for three months. The suspension is in effect from May 20, 2013, through August 19, 2013.

February 2009 Employment Separation After Allegations

Firm Name: J.P. Turner & Company, LLC

Termination Type: Permitted to Resign

Allegations: Unauthorized trading. See occurrence #1436280

Broker Comment: 1. Customer complaint of [Customer], (CRD Disclosure #1436280) and 2. Termination form J.P Turner & Co. (CRD Disclosure #1442932) These two disclosures are the result of a single transaction and occurrence concerning unauthorized trading in [Customer’s] account. I absolutely reject the claim that any unauthorized trades were placed in [Customer’s] account. . . .

January 2009 Customer Dispute

Status: Settled

Damage Amount Requested: $75,584.47

Settlement Amount: $67,832.50

Broker Comment: 1. Customer complaint of [Customer], (CRD Disclosure #1436280) and 2. Termination form J.P Turner & Co. (CRD Disclosure #1442932) These two disclosures are the result of a single transaction and occurrence concerning unauthorized trading in [Customer’s] account. I absolutely reject the claim that any unauthorized trades were placed in [Customer’s] account. . . .

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