← Broker database 2025-06-30
Thomas Sapio Fined $5,000 and Suspended Two Months for Failing to Supervise Traders Mismarking Positions
According to FINRA, Thomas Sapio was fined $5,000, suspended from association with any FINRA member in any principal capacity for two months, and required to complete ten hours of continuing education concerning supervisory responsibilities.
The findings revealed that Sapio failed to reasonably supervise two traders who were inaccurately marking the value of positions on their trading books to conceal millions of dollars in unrealized losses from their member firm. Sapio failed to reasonably investigate or respond to red flags that the traders were mismarking their positions.
Sapio was aware that market events could have reduced the value of each trader's forward start reverse repurchase positions. However, Sapio did not see the traders' profit and loss decrease in the wake of these market events, which should have raised concerns. When Sapio spoke with the traders, one of them admitted that his marks were incorrect. The trader assured Sapio that he would correct his marks but failed to do so.
Despite this admission, Sapio did not check the marks in the system or take any subsequent steps to ensure that the traders entered correct marks going forward. Eventually, one of the traders informed Sapio of the full scope of the unrealized losses on his trading book, and Sapio raised the issue to senior management.
The firm then corrected the inaccurate marks, terminated one of the traders, and permitted the other to resign.
The suspension is in effect from July 7, 2025, through September 6, 2025. This case demonstrates that supervisors must follow up on red flags and cannot simply accept assurances from those they supervise without verification. When market events suggest positions should have decreased in value but reported values remain unchanged, that discrepancy requires investigation.