← Broker database 2023-04-17
Jason DiPaola Suspended Four Years for Undisclosed Outside Account and False Compliance Forms
According to FINRA, Jason Lynn DiPaola was fined $40,000 and suspended for four years for failing to disclose an outside account in which he exercised discretionary trading authority, submitting false and misleading compliance forms to his employer, and failing to provide on-the-record testimony. DiPaola appealed the decision to the SEC.
The National Adjudicatory Council found that DiPaola exercised discretionary authority in his mother's account, held outside of his member firm, without disclosing the account's existence to his firm or disclosing his status as an associated person to the executing firm. DiPaola provided false and misleading responses on his firm's compliance questionnaires and certification forms by disclosing only his own accounts and not listing his mother's account, despite exercising control over it.
Additionally, DiPaola failed to participate in on-the-record testimony requested by FINRA in connection with its investigation into his trading activity, including whether he improperly traded in his mother's account without providing requisite disclosures and whether he engaged in other violations such as insider trading or market manipulation. While DiPaola testified in three on-the-record interviews, he failed to respond to further requests for testimony to cover additional areas of inquiry, such as his involvement with the issuer of a security frequently traded in his outside accounts and specific transactions investigators believed may have violated securities laws.
This case demonstrates multiple serious violations. Outside accounts must be disclosed so firms can supervise their representatives' trading activity and identify conflicts of interest or prohibited conduct. The false compliance forms compounded the violation by affirmatively misrepresenting his activities. The refusal to complete testimony obstructed FINRA's investigation into potential market manipulation or insider trading.