According to FINRA, David Charles Cannata (CRD #2408845, Smithtown, New York) was barred from association with any FINRA member in any capacity and ordered to pay $1,566,298.14, plus interest, in restitution to customers. The sanctions were based on findings that Cannata allegedly made unsuitable recommendation and excessively traded in customer accounts at his member firm. The findings stated that Cannata had de facto control over the customer accounts and made all investment decisions.
According to the report, Cannata’s trading strategy in each client’s account generated extraordinary levels of activity inconsistent with the clients’ objectives and financial circumstances. The clients sustained losses ranging from $114,171 to $1,263,527 as a result of Cannata’s trading strategy. The findings also stated that Cannata allegedly churned his customers’ accounts. Purportedly, Cannata knowingly or recklessly disregarded his customers’ interests by seeking to maximize his own compensation. Both the high turnover rate and cost-to-equity ratio establish that Cannata recommended and executed trades in the customers’ accounts for his own benefit, without regard for his customers’ resources or best interests. As a result of his conduct, Cannata violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 and FINRA Rule 2020.
The findings also included that Cannata failed to appear and provide FINRA with sworn testimony in connection with FINRA’s investigation into his trading in the customer accounts. FINRA found that Cannata willfully failed to timely amend his Form U4 to disclose tax liens totaling $189,449. Prior to reporting the tax liens, Cannata signed and submitted an amended Form U4 reporting no liens against him, representing that he would timely update the form with material changes.
For FINRA’s full findings see FINRA Case #2013037857001.
According to FINRA BrokerCheck, Cannata was registered with Craig Scott Capital, LLC in Uniondale, NY from 02/2012 – 09/2014.
The foregoing information, which is all publicly available on FINRA’s website, is being provided by The White Law Group. The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Franklin, Tennessee. For more information on the firm and it’s representation of investors, visit www.whitesecuritieslaw.com.