Michael Pellegrino

Date:

May 12, 2021

Type of alert:

FINRA AWC  

On January 26, 2021, former Investment Company and Variable Contracts Products Representative consented to sanctions imposed by the Financial Industry Regulatory Authority (FINRA) to resolve allegations that he violated securities industry rules by making misleading statements and omitting material information, among other things. Michael Pellegrino has been associated with two member firms: Center Street Securities from October 2011 to October 2012 and Taylor Capital Management, Inc. (TCM) from October 2012 to April 2018. Both firms are located in Oakbrook, Illinois.

In July 2017, Pellegrino allegedly distributed an advertisement promoting a short-term, high yield contract issued by a Florida limited liability company to approximately 80 retail investors, 50 of whom were customers at TCM. Investors had to agree to provide funds for distribution at the issuer’s discretion and sign a “Memorandum of Indebtedness” (MOI). Then, the issuer would pool investor funds to issue “Merchant Cash Advances” to small businesses that were unable to secure loans from traditional avenues. Based on Pellegrino’s ad, investors expected to make investment returns based on a percentage of the merchants’ future income revenues.

However, Pellegrino allegedly made misleading statements, improper projections of future performance, and omitted material information regarding the operation of the MOI. For example, the ad made investment projections referencing 6-10% investment returns, but, in actuality, the issuer had sole control over what would be paid to investors, if anything. The ad also stated that the investment would be “Based by Collateral . . . Asset Backed Like Cash, CDs, Oil, and Real Estate” and would involve “No Stock Market or Interest Rate Risk,” falsely suggesting that the MOI was risk averse.

For these reasons, FINRA found Pellegrino violated FINRA Rules 2210(d) and 2010. Without admitting or denying the allegations made against him, Michael Pellegrino consented to a two-month suspension from association with any FINRA member in any capacity and a $10,000 fine. Pellegrino’s FINRA BrokerCheck report shows numerous customer disputes related to these allegations, with millions of dollars requested in damages.

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