Paul W. Petrillo (“Petrillo”) of Thrivent Financial and Thrivent Investment Management (“Thrivent”) has been barred from the securities industry by the regulator FINRA, the Financial Industry Regulatory Authority. Allegations leading to the bar concern Petrillo’s execution of investor trades away from Thrivent and sales of private securities.
Between August 1, 2013 and April 2, 2017, Petrillo placed 333 orders to buy or sell securities, at his discretion, in twelve customers’ outside securities accounts without notifying Thrivent of his authority to do so or the executing firm of his association with Thrivent. Petrillo also opened a family trust securities account over which he had trading authority away from Thrivent in October 2013 but did not notify the Firm of the account’s existence. By virtue of this misconduct, he violated NASD and FINRA rules.
Regulatory rules prevent the use of outside accounts to conduct business because of the likelihood of fraud. When a trade is made by a broker at an outside brokerage account it prevents a brokerage from supervising the trade. There are very few reasons to make such a trade other than to avoid supervision.
The sale of private securities is also of concern. Such securities are only suitable to a small section of the investing public and, as such, can only be sold to limited investors. These securities also have limited transparency and often need the review of a brokerage to confirm legitimacy. Heightened commissions of such investments make them attractive to brokers.
Petrillo also provided false information to regulators during the investigation. On September 19, 2018, FINRA asked Petrillo to identify any investor accounts in which he traded away from Thrivent, aside from one customer about whom FINRA already knew and in whose account Petrillo had previously admitted to trading. Petrillo deliberately failed to inform FINRA about 11 customer accounts in which he effected trades away from his firm. This was done despite rules requiring the disclosure of such accounts to FINRA. Petrillo’s response was therefore false.
Thrivent was aware of the Petrillo’s propensity to engage in such actions. In October 2017, Thrivent also entered into a settlement concerning the inappropriate use of discretion by Mr. Petrillo. Thrivent paid the investor $33,000 to settle such claims.
If you were an investor of Petrillo’s and believe he may have executed securities trades for you away from Thrivent, please call 303-300-5022. Consultations are free and confidential.
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