Initiated By
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Allegations
SEC ADMIN RELEASES 33-9359, 34-67810, IA RELEASE 3461, INVESTMENT COMPANY ACT OF 1940 RELEASE 30197, SEPTEMBER 10, 2012: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMED IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE AND CEASE-AND-DESIST PROCEEDINGS BE INSTITUTED PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT"), SECTIONS 15(B) AND 21C OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND SECTION 9(B) OF THE INVESTMENT COMPANY ACT OF 1940 ("INVESTMENT COMPANY ACT") AGAINST RALPH CALABRO ("CALABRO").
THE DIVISION OF ENFORCEMENT ALLEGED THAT: CALABRO SERVED AS A REGISTERED REPRESENTATIVE ("RR") OF THE PARLIN, NEW JERSEY BRANCH OFFICE OF A BROKER-DEALER FROM MARCH 2004 UNTIL JANUARY 2011.
BETWEEN JANUARY 1, 2008 AND DECEMBER 31, 2009, CALABRO, AND TWO OTHER RRS, COLLECTIVELY "CHURNED" THE ACCOUNTS OF SEVEN CUSTOMERS BY ENGAGING IN EXCESSIVE TRADING FOR THEIR OWN GAINS IN DISREGARD OF THE CUSTOMERS' CONSERVATIVE INVESTMENT OBJECTIVES AND LOW OR MODERATE RISK TOLERANCES FOR THE PURPOSE OF GENERATING COMMISSION BUSINESS. THEIR MISCONDUCT GENERATED COMMISSIONS, FEES AND MARGIN INTEREST TOTALING APPROXIMATELY $845,000 WHILE THE DEFRAUDED CUSTOMERS SUFFERED AGGREGATE LOSSES OF APPROXIMATELY $2,700,000.
DURING THE RELEVANT PERIOD, CALABRO ENGAGED IN CHURNING THE ACCOUNTS OF THREE CUSTOMERS. CALABRO EXERCISED DE FACTO CONTROL OVER THE ACCOUNTS OF THE THREE CUSTOMERS.
THE ANNUALIZED TURNOVER RATIOS IN THE ACCOUNTS RANGED FROM 8 TO 13, AND THE ANNUALIZED BREAK-EVEN RATES OF RETURN RANGED FROM 22.9 PERCENT TO 31.8 PERCENT. THE TRADING IN THESE ACCOUNTS WAS EXCESSIVE IN LIGHT OF CALABRO'S CUSTOMERS' INVESTMENT OBJECTIVES AND EXPERIENCES, AGES AND FINANCIAL NEEDS.
CALABRO KNOWINGLY OR RECKLESSLY ENGAGED IN THE CONDUCT. CALABRO RETAINED A PORTION OF THE COMMISSIONS AND FEES EARNED BY THE BROKER-DEALER FOR THE TRADES. CALABRO'S CUSTOMERS SUFFERED APPROXIMATE LOSSES OF $2,300,000. CALABRO KNOWINGLY OR RECKLESSLY DISREGARDED HIS CUSTOMERS' INVESTMENT OBJECTIVES, FINANCIAL SITUATIONS AND INTERESTS FOR HIS OWN FINANCIAL GAIN.
AS A RESULT OF THE CONDUCT, CALABRO WILLFULLY VIOLATED SECTION 17(A) OF THE SECURITIES ACT AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER, WHICH PROHIBIT FRAUDULENT CONDUCT IN THE OFFER AND SALE OF SECURITIES AND IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES.
Resolution
Order
Bar
Bar (Permanent)
Registration Capacities Affected
SEE COMMENT
Start Date
5/29/2015
Sanctions
Cease and Desist
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount
$150,000.00
Sanctions
Disgorgement
Amount
$247,945.00
Sanctions
Monetary Penalty other than Fines
Amount
$45,997.68
Broker Comment
SEC INITIAL DECISION RELEASE 517, NOVEMBER 8, 2013: THE INITIAL DECISION FOUND THAT RALPH CALABRO (CALABRO) CHURNED THE ACCOUNT OF ONE CUSTOMER AND DID NOT CHURN THE ACCOUNTS OF TWO OTHER CUSTOMERS. THE ADMINISTRATIVE LAW JUDGE ("ALJ") FOUND THAT CALABRO ENGAGED IN UNAUTHORIZED AND EXCESSIVE TRADING AND HE UNILATERALLY DEVISED AND CARRIED OUT AN INVESTMENT STRATEGY CONTRARY TO THE CUSTOMER'S INVESTMENT OBJECTIVES AND RISK TOLERANCE, WHICH RESULTED IN A SUBSTANTIAL GAIN FOR CALABRO AND A MASSIVE LOSS FOR THE CUSTOMER. THE ALJ CONCLUDED THAT CALABRO ACTED INTENTIONALLY, THAT IS, WITH SCIENTER, AND CHURNED THE CUSTOMER'S ACCOUNT. IN CONSIDERING THE SANCTION, THE ALJ FOUND THAT THE ACTIONS OF CALABRO WERE EGREGIOUS AND RECURRENT. HE RECKLESSLY DISREGARDED HIS CUSTOMER'S CONSERVATIVE INVESTMENT OBJECTIVES AND RISK TOLERANCES AND PURSUED AN ACTIVE TRADING STRATEGY GENERATING THOUSANDS OF DOLLARS IN COMMISSIONS. CALABRO UNILATERALLY DEVISED AND EXECUTED AN INVESTMENT STRATEGY CONTRARY TO THE CUSTOMER'S INVESTMENT OBJECTIVES. CALABRO'S VIOLATIONS SPANNED MONTHS AND INVOLVED HUNDREDS OF TRADES. CALABRO ACTED WITH SCIENTER. CALABRO HAS FAILED TO RECOGNIZE THE WRONGFUL NATURE OF HIS ACTIONS AND HAS NOT MADE ANY ASSURANCES AGAINST FUTURE VIOLATIONS. IN FACT, HE INSISTS THAT NO VIOLATIONS OCCURRED. CALABRO CONTINUES TO WORK IN THE SECURITIES INDUSTRY TODAY, SO HIS PROFESSION PRESENTS OPPORTUNITIES TO VIOLATE THE SECURITIES LAWS AGAIN. IT IS ORDERED THAT, PURSUANT TO SECTION 8A OF THE SECURITIES ACT OF 1933, SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934, AND SECTION 203(K) OF THE INVESTMENT ADVISERS ACT OF 1940, RALPH CALABRO SHALL CEASE AND DESIST FROM COMMITTING OR CAUSING VIOLATIONS OR FUTURE VIOLATIONS OF SECTION 17(A) OF THE SECURITIES ACT OF 1933 AND SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 10B-5 THEREUNDER. IT IS ORDERED THAT, PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934, RALPH CALABRO IS BARRED FROM ASSOCIATION WITH A BROKER, DEALER, INVESTMENT ADVISER, MUNICIPAL SECURITIES DEALER, MUNICIPAL ADVISOR, TRANSFER AGENT, OR NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATION. RALPH CALABRO SHALL DISGORGE $282,000 PLUS PREJUDGMENT INTEREST OF $34,975.90, PLUS ADDITIONAL PREJUDGMENT INTEREST DUE FROM JUNE 1, 2013, THROUGH THE LAST DAY OF THE MONTH PRECEDING WHICH PAYMENT IS MADE. RALPH CALABRO SHALL PAY A CIVIL MONEY PENALTY IN THE AMOUNT OF $150,000. THE INITIAL DECISION SHALL BECOME EFFECTIVE IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF RULE 360 OF THE COMMISSION'S RULES OF PRACTICE, 17 C.F.R. § 201.360. THE INITIAL DECISION WILL NOT BECOME FINAL UNTIL THE COMMISSION ENTERS AN ORDER OF FINALITY. THE COMMISSION WILL ENTER AN ORDER OF FINALITY UNLESS A PARTY FILES A PETITION FOR REVIEW OR MOTION TO CORRECT MANIFEST ERROR OF FACT OR THE COMMISSION DETERMINES ON ITS OWN INITIATIVE TO REVIEW THE INITIAL DECISION AS TO A PARTY. IF ANY OF THESE EVENTS OCCUR, THE INITIAL DECISION SHALL NOT BECOME FINAL AS TO THAT PARTY.
