Recent allegations against Michael Delao, a registered agent of St. Bernard Financial Services, Inc., have brought to light the seriousness of reporting violations in the financial industry. The case revolves around Delao’s arrest and subsequent felony charge on March 31, 2019, which he failed to report on his Form U4 until September 27, 2022. Despite the felony offense being reduced to a Class 1 Misdemeanor on April 14, 2021, and ultimately set aside on June 2, 2021, Delao falsely answered “No” to the question of whether he had “been arrested or convicted of any crime that has not been reported to St. Bernard” on the firm’s annual compliance questionnaires completed between 2019-2022.
Understanding the Allegation and the FINRA Rule
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Delao’s failure to report his felony offense within 30 days to the Securities Commissioner constitutes a violation of Sec. 115.9(a)(2) of the Board Rules. This violation, according to Secs. 4007.105(a)(13)(B) & 4007.106(a)(3) of the TSA, forms a basis for suspension and an administrative fine. The FINRA (Financial Industry Regulatory Authority) Rule 2010 states that a registered person in the securities industry must “observe high standards of commercial honor and just and equitable principles of trade.” This includes the obligation to provide accurate and timely information on the Form U4, which is used by broker-dealers, regulators, and the investing public to assess a broker’s fitness to engage in securities business.
Why This Matters to Investors
Investors rely on the accuracy of a broker’s Form U4 to make informed decisions about their investments. Therefore, any misrepresentation or omission of information, such as Delao’s failure to report his felony offense, undermines the integrity of the securities industry and could potentially lead to investor harm. Investors need to trust that their financial advisors are adhering to the highest standards of ethical and professional conduct. Violations of these standards not only damage the reputation of the individual broker and their firm, but also erode investor confidence in the financial industry as a whole.
Recognizing Red Flags and Recovering Losses
Investors should be vigilant for signs of financial advisor malpractice, such as inconsistencies in reporting, unexplained losses, or failure to disclose significant personal or professional events. In such cases, investors can turn to FINRA Arbitration, which offers a quicker, less formal, and often less expensive alternative to litigation. The national investment fraud law firm Haselkorn & Thibaut, with offices in Florida, New York, North Carolina, Arizona, and Texas, is currently investigating the advisor and company. With over 50 years of experience, successful financial recoveries for investors, and an impressive 98% success rate, Haselkorn & Thibaut offers free consultations to clients and operates on a “No Recovery, No Fee” policy. They can be reached at their toll-free consultation number, 1-800-856-3352.
Investors who believe they may have been affected by Delao’s actions can check his record on the FINRA BrokerCheck (CRD 36956) for more information. It is crucial for investors to protect their investments by staying informed and seeking professional assistance when necessary.
