Washington, DC — The Financial Industry Regulatory Authority (FINRA) announced today that it has barred former New York broker Sergio M. Del Toro from the securities industry for defrauding a 90-year-old Minnesota man of $511,000. Del Toro's customer was living in a nursing home with his 87-year-old wife at the time. The customer died in 2006, before the customer's daughter brought Del Toro's activities to FINRA's attention.
From 2004 to 2006, on Del Toro's recommendation, the customer invested $511,000 in 3rd Dimension, Inc., a speculative, development-stage company. Its securities were not publicly quoted or traded, and it did not have publicly available financial information. The company was in the business of developing and distributing digital media audio and video technologies for the Internet. Del Toro knew that 3rd Dimension had little or no revenues at the time he recommended its securities to his customer.
FINRA also found that Del Toro, in order to cover up his activities, sold the securities to the customer without the knowledge of the two brokerage firms with which he was then registered. Del Toro induced the customer to invest $351,000 by promising, in writing, that he would buy the shares back for $400,000 if the customer were not satisfied with the investment. The customer made additional stock purchases on Del Toro's recommendation that brought the customer's total investment to $511,000.
The customer made his investments through a series of six private transactions. Del Toro received a 15 percent commission on the sales, or about $76,650. The customer paid between $3.00 and $4.00 per share for 3rd Dimension stock. Del Toro was found to have effected unsuitable investments for the customer given the customer's age and financial condition. Further, Del Toro had no reasonable basis for valuing the company's stock at between $3.00 and $4.00 per share at the time of the customer's investment.
"One of FINRA's highest objectives is to protect our nation's elderly citizens from fraudulent conduct by brokers," said Thomas R. Gira, Executive Vice President for Market Regulation. "Del Toro preyed on this vulnerable customer by defrauding the customer of over half a million dollars that he earned over a lifetime of hard work, at a time that the customer and his family needed it most."
Del Toro agreed to a permanent bar from the securities industry without admitting or denying the alleged misconduct, but consenting to the entry of FINRA's findings.
Investors can obtain more information about, and the disciplinary record of, any FINRA-registered broker or brokerage firm by using FINRA's BrokerCheck. FINRA makes BrokerCheck available at no charge. In 2008, members of the public used this service to conduct 11.6 million reviews of broker or firm records. Investors can access BrokerCheck at www.finra.org/brokercheck or by calling (800) 289-9999.
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