The Financial Industry Regulatory Authority has barred a New Jersey advisor with a checkered professional history for not providing testimony in an investigation into his business practices.
The advisor, Anthony J. Cantone, has in the past been the target of a Finra complaints that he and his firm, Cantone Research Inc. in Eatontown, N.J., made fraudulent misrepresentations about two municipal bond offerings that the firm underwrote. In 2021, the agency said that these bonds defaulted and 150 clients of Cantone Research lost $6.2 million.
While Cantone has not disputed the findings, his wife said that he has not participated in the Finra investigation because he suffered a hemorrhagic stroke in June 2022 and is recovering slowly.
Last Friday, Finra barred Cantone, saying he violated its Rules 8210 and 2010 “by refusing to provide on-the-record testimony as requested.” The agency’s investigation involved Cantone’s “customers’ purchases of low-priced securities, as well as possible conflicts of interest between his outside business activities and his customers.” The letter of acceptance, waiver and consent did not elaborate on the activities that got him barred, though the letter did refer to a 2017 administrative consent order with the New Jersey Bureau of Securities that "found that Cantone had sold unregistered securities in 2005 and 2007.”
When contacted by Financial Advisor, Cantone's wife, Christine L. Cantone, provided medical records stating that her husband had suffered an intracerebral hemorrhage, that he cannot work anymore and that he's "lucky to be alive." She added that the settlement bars her from commenting on the case.
In 2017, the New Jersey Office of the Attorney General said both Cantones agreed to a $2.1 million settlement, including $1.8 million in money they had to return to investors, for violating that state’s securities laws.
In a release at the time, the bureau said “the defendants engaged in dishonest or unethical practices in selling securities—in the form of certificates of participation—to more than 170 investors. These investors put up $4.7 million to invest in loans, in the form of promissory notes, taken out by a developer for a planned 186-unit condo complex in Orlando called Esplanade at Millennia Condominiums.”
Among the issues raised by New Jersey regulators was the allegation that Cantone and his firm didn’t tell investors important information about the investments, such as the fact that the developer guaranteeing the investments was highly leveraged and the securities weren’t registered with the bureau “meaning that they could not legally be offered to investors.” The bureau said the developer “eventually defaulted on the investment loans for the project.”
In its October 2021 complaint, Finra said Cantone and his firm made fraudulent misrepresentations about the underwriting and sale of two bond issues totaling more than $8 million, one for the rehabilitation of an assisted living facility in Alabama and one for the rehabilitation of a college dormitory in Illinois.
Investors lost more than $6 million from the investments, Finra said.
Neither project was backed by a municipality and both would return money to investors only after they generated enough revenue after operating expenses. Investors faced losses if the projects did not make enough revenue. Finra said that Cantone Research was the sole underwriting on these issues.
The bonds for the assisted living facility, known as the Cedars, totaled $6,025,000. The bonds for the dormitory totaled $2.2 million.
Cantone Research terminated is Finra affiliation in Sepember.
Editor's Note: This story was updated with a response from Cantone's wife on Dec. 20.