According to FINRA, John Anthony Orlando is facing charges alleging he willfully violated securities laws by churning a customer's account, engaging in unsuitable trading, and making false statements to his firm.

The complaint alleges Orlando exercised de facto control over a customer's account by controlling trading volume and frequency, deciding what securities to buy and sell, quantities, prices, and timing. The customer allegedly relied on Orlando's recommendations and consistently followed them. Orlando's trading allegedly was excessive and quantitatively unsuitable, evidenced by an annualized turnover rate of 9.65 and cost-to-equity ratio of nearly 74 percent.

The alleged trading generated more than $650,000 in commissions for Orlando and his firm, plus more than $770,000 in additional costs paid to underwriters of offerings, totaling over $1.4 million in costs. The customer allegedly experienced approximately $1,245,000 in losses.

The complaint further alleges Orlando lacked reasonable basis to believe his recommended transactions and strategy were suitable for any customer. He allegedly failed to understand or evaluate the fees and costs and their effect on profitability. About half the offerings allegedly included warrants, and Orlando's strategy involved promptly selling newly purchased shares and holding warrants. However, he allegedly failed to conduct due diligence on the companies or analyze likelihood of warrants becoming profitable. The warrants were allegedly issued by companies with little revenue, no income, and subject to going concern opinions.

Additionally, the complaint alleges Orlando falsely characterized transactions as unsolicited when he actually solicited them, causing inaccurate books and records. He also allegedly made false statements to his firm on compliance questionnaires about how he communicated with the customer, denying text message communications when he had exchanged text messages related to the customer's account.

This is a pending complaint, so these allegations have not been proven. However, if proven, they would demonstrate extreme churning that generated massive costs and losses while enriching Orlando. A cost-to-equity ratio of nearly 74 percent and losses exceeding $1.2 million would represent catastrophic harm to the customer.