NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

David Michael Isabella
OS/2006005132303

Isabella fraudulently induced customers, most of whom were retired or nearing retirement, to entrust him with their retirement savings and purchase securities from him by promising that he could achieve sustained annual rates of return of at least 10 percent each and every year, which would allow for consistent annual withdrawal, ranging from 7 percent to 13.5 percent fromtheir investment portfolios without depletion of principal. Many of the customers relied on Isabella’s fraudulent representations when determining to invest their retirement funds with him, and based their decision to retire sooner than they had otherwise planned, at least in part, upon the representation that they would receive enough monthly income from their retirement accounts to live on for the rest of their lives.

Isabella made unsuitable investment recommendations and effected transactions in customers’ accounts without having reasonable grounds for believing that the transactions were suitable for the customers in view of the over-concentration in equities, the related fees incurred, and in light of the customers’ financial situations, investment objectives and needs. Isabella’s promised returns and withdrawal rates proved to be unsustainable, resulting in the depletion of the customers’ retirement savings and forcing some to return to employment. Isabella falsified records maintained by his member firm concerning his customers’ financial situations and goals, and as a result, the customers did not receive the firm’s promised benefit of having an investment manager selected based on their individual needs and financial situations.

Isabella inappropriately obtained confidential contact and employment information about a company’s employees, without their knowledge, authorization or consent, from personnel in the company’s human resources and other departments, and rewarded the contacts for their assistance with gifts.

In addition, Isabella used a false professional designation on correspondence with customers.

Isabella provided false testimony during a FINRA on-the-record interview.

David Michael Isabella: Barred

Tags: Retirement  Suitability  False Professional Designation