National Securities Corp Complaints, Regulatory Actions

The White Law Group reviews the regulatory history of National Securities Corp.

National Securities Corp., a subsidiary of National Holdings Corp. (CRD#: 7569, Boca Raton, FL), is an independent broker dealer located in Boca Raton, FL. The firm has 82 disclosures reported on it CRD including 66 regulatory events and 16 arbitrations, according to the Financial Industry Regulatory Authority.

In February 2021, B. Riley Financial, Inc. (NASDAQ: RILY) and National Holdings Corporation (NASDAQ: NHLD) announced the completion of the firms’ previously announced merger. In connection with the transaction, National becomes a wholly owned subsidiary of B. Riley Financial and an affiliate of B. Riley Wealth Management. National adds nearly 700 registered representatives and assets of approximately $20 billion to the B. Riley Financial platform. B. Riley Wealth Management currently includes over 170 advisors and assets of over $12 billion.

FINRA Claims to Recover Investment Losses

The White Law Group filed a FINRA arbitration claim against National Securities Corp and B. Riley Wealth Management for investment losses involving high risk alternative investments.  The claim seeks damages of $1,000,000 and $5,000,000. 

The firm submitted a claim to FINRA Dispute Resolution on behalf of Georgia resident alleging claims for violation of common law fraud, breach of fiduciary duty, negligence, and negligent supervision.   

All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct.  Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.

When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration. 

Broker Misconduct and Customer Complaints

There have been several cases of registered representatives employed by National Securities who were allegedly involved in broker misconduct and fraudulent activities. 

December 2023 – FINRA reportedly barred former advisor Michael Fasciglione from working in the securities industry after multiple customer complaints were filed against him. Allegations include unsuitable investments, breach of contract, breach of fiduciary duty, negligence, among others. 

The bar reportedly followed FINRA’s Notice of Suspension and Suspension from Association.  Fasciglione reportedly failed to request termination of his suspension within three months of the date of the Notice of Suspension; he is automatically barred from association with any FINRA member in all capacities. 

October 2020 – FINRA reportedly barred former National Securities Corp. advisor Jeffrey Broten from associating with any FINRA member at any time.

Broten allegedly refused to provide on-the-record testimony requested by FINRA in connection with its investigation into his potentially unsuitable and unauthorized trading while associated with National Securities Corp.

According to his broker profile, Broten was reportedly registered with National Securities Corp.  in Titan Falls, NJ  from 2009 until 2018. Broten reportedly has 6 customer complaints filed against him during his career in the securities industry, with one still pending from May 2020.

June 2019 – Former National Securities Corp. advisor Michael Alan Siegel was barred after allegations of theft, misrepresentation, churning, and unauthorized trades. He reportedly pled guilty last year to stealing more than $270,000 from an elderly couple, according to state records in New Jersey.

Siegel reportedly worked with the couple, first while registered with Concorde Asset Management and then as an agent with National Securities Corp., from around July 2013 through January 2016.

Siegel reportedly recommended that the couple should invest in an options program, allegedly instructing them to make the checks out to him rather than to his firm. Unfortunately for the investors, there was no options program and Siegel purportedly kept the money for himself.

November 2018 – FINRA reportedly barred former National Securities Corp. advisor Kyle Harrington after he allegedly converted customer funds.

The complaint further alleges that Harrington engaged in a series of private securities transactions with at least two individuals through which he sold over 300,000 shares of restricted stock he had purportedly received as compensation from a company for approximately $276,000.

According to his broker report, Harrington was a registered representative with National Securities Corp. in San Diego, California from July 2012 until November 2016.

National Securities Corp. has also reportedly had issues with regulators.

FINRA Sanctions National Securities Corp for Misconduct involving Pre-IPO Sales  

April 2022: According to a document posted by FINRA, the regulator has censured and fined National Securities Corp  $300,000 plus disgorgement of $363,447.67 plus interest for rules violations involving the sales of “pre-IPO” private placement offerings.  

 In December 2017 and January 2018, the firm reportedly sold a “pre-IPO” private placement offering managed by its affiliated investment adviser. In connection with that offering, National Securities Corp allegedly deceived investors by offering interests in a private unnamed company at a price not to exceed $9.75 per share, even though the firm had failed to locate shares available at that price.  

The offering eventually purchased shares in the company at more than double the maximum price listed in the offering documents in violation of FINRA Rule 2010. 
 
The firm also purportedly failed to reasonably enforce its written procedures concerning the offering of “pre-IPO” shares and failed to reasonably supervise the head of its private share business.  In addition to the fine and censure, the firm agreed to adopt and implement policies, procedures, and systems to address the violations.   

FINRA Censures and Fines National Securities Corp.

October 2020 – FINRA reportedly censured and fined broker-dealer National Securities Corporation $125,000 in connection with sales practices violations and supervisory issues.

FINRA allegedly found that between May 2015 and November 2018, National Securities reportedly filed four late Form U4 amendments, filed eight late Form U5 amendments, and failed to file five Form U4 amendments. 

During this period, the firm also purportedly failed to report or reported late statistical and summary information for 19 written customer complaints, reported late a $30,000 settlement of a customer’s claim against one of its associated persons for sales practice violations, and submitted 34 inaccurate or incomplete filings required by FINRA.

December 2015 – National Securities Corporation  was reportedly censured and fined $4,000 for allegedly engaging in dishonest and unethical business practices, by both employing an individual who engaged in cold-calling without being registered as an agent under Connecticut securities law, and employing one or more agents who used sales presentations to mislead potential customers. According to FINRA,  the firm did not maintain accurate and current books and records, as well as failed to create and maintain a system to supervise employees. 

April 2015 –   The firm was censured and fined $20,000 for reportedly failing to disclose that it would receive selling compensation for a private placement that it had marketed to potential investors. 

December 2014 –  National Securities Corporation was reportedly censured and fined $35,000 for allegedly filing late paperwork with FINRA, as well as reclassifying customer complaints as sales practice violations. The firm purportedly failed to report settlements of customer FINRA dispute resolution claims for damages exceeding $15,000 within the required time period. 

Class Action vs. Individual FINRA Arbitration Lawsuit 

You may wonder whether a large class action lawsuit is a better litigation option than an individual FINRA arbitration case.  The answer depends on many factors, but typically if the loss sustained is large (say larger than $100,000), an individual arbitration claim is likely a better option.  Class actions as a recovery option are more appropriate for grouping large numbers of individuals who have small claims – too small to generally pursue individually. 

Free Consultation with a Securities Attorney

The foregoing information, which is all publicly available, is being provided by The White Law Group. The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.

If you have concerns regarding investments you purchased through National Securities Corp. and would like to speak with a securities attorney, please call The White Law Group at 888-637-5510.