Marc Augustus Reda (CRD #2757330, New York, New York)

March 21, 2022 – An Order Accepting Offer of Settlement was issued in which Marc Augustus Reda was barred from association with any FINRA member in all capacities. Without admitting or denying the allegations, Reda consented to the sanction and to the entry of findings that he willfully violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and violated FINRA Rule 2020 by churning customer accounts that he exercised de facto control over. The findings stated that Reda made the trading decisions for the customers’ accounts, including which securities to trade, the volume, and the timing of when to buy or sell. The customers relied on Reda to make securities recommendations and consistently followed his recommendations. Reda also exercised control in instances when he made unauthorized transactions in customer accounts. The findings also stated that Reda recommended securities transactions in his customers’ accounts that were excessive and quantitatively unsuitable for each of the customers in light of their investment profiles. In excessively trading these accounts, Reda maximized his own financial benefit at the expense of his customers, generating costs of $264,734 and causing realized losses of $232,043 on accounts with an aggregate average monthly account value of $262,234. The findings also included that Reda recommended his costly active trading strategy to his customers without understanding the potential risks and rewards. Reda failed to consider the effect of the strategy’s costs on his customers’ ability to generate a profit and did not conduct any research or analysis, or seek any guidance, on whether his strategy could be profitable given the cumulative costs incurred through the implementation of his strategy. Reda did not understand what cost-to-equity ratios and turnover rates were and consequently failed to consider and calculate these metrics when recommending and executing his active trading investment strategy in his customers’ accounts. Reda had no reasonable basis to believe that the investment strategy he recommended to his customers was suitable. FINRA found that Reda had an obligation to know his customers prior to recommending a securities transaction or strategy to them. However, Reda recommended both a speculative investment strategy and, to implement that strategy, recommended speculative securities transactions to customers without a reasonable basis to believe the recommended strategy and individual securities transactions were suitable for those customers based on their investment profiles, including their investment objectives. FINRA also found that Reda executed transactions in non-discretionary accounts of customers without the customers’ prior authorization or consent. In addition, FINRA found that the commissions Reda charged were excessive, unfair, and unreasonable taking into consideration all relevant circumstances, including that Reda did not disclose to his customers, prior to effecting the transactions, that he would charge such high commissions. Reda also intentionally circumvented his member firm’s supervisory procedures in order to charge commissions well in excess of five percent on the proceeds transactions. Moreover, FINRA found that Marc Augustus Reda willfully failed timely disclose eight customer complaints alleging sales practice violations and willfully failed to amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose an unsatisfied tax lien and an unsatisfied tax warrant, totaling $225,929.49. (FINRA Case #2019063526901)