In July 2018, Hornor, Townsend & Kent filed a complaint-summons in Edison Township Municipal Court against Tranchina, asking that he be charged with theft by unlawful taking and criminal mischief for destroying property belonging to the RIA.
Finra’s disciplinary panel found that Tranchina committed conversion, or the intentional and unauthorized taking or exercise of ownership over property by someone with no right of ownership or possession—in other words, that Tranchina had no right to the files he broke into his office to receive.
The panel also found that Tranchina violated Finra Rule 2010, the requirement that all industry members conduct business with high standards of commercial honor and that they maintain just and equitable principles of trade. The panel argued that conversion overlaps with a violation of Rule 2010, and that by taking documents he did not have any right to, Tranchina also violated Finra’s standards of conduct.
Finally, the panel found that Tranchina failed to adequately update his Form U4 and notify his subsequent firm of the criminal complaint-summons against him. In the proceedings, Tranchina argued that because he was never formally charged and he was granted conditional dismissal on the charges as part of a diversion program, the charges did not have to be disclosed as part of a judicial proceeding as required by Finra.
However, the Finra disciplinary panel found that the complaint-summons qualified as a judicial proceeding because it relied on a sworn, signed statement by the plaintiff; Finra also argued that Tranchina never told Chelsea, his new firm, about his court appearances or the conditional dismissal. Instead, Chelsea learned about them via a Finra request related to its investigation of Tranchina.
After barring Tranchina from association with any Finra member firm, the panel elected not to apply the suspension fines typically levied for failures to disclose judicial proceedings with aggravating factors.
The panel did order Tranchina to pay administrative and transcript costs in the amount of $4,977.43.