If you’re thinking of hiring a financial advisor, the Francisco Faraco case will make you think again. From forgery to fraud, this man did multiple crimes and all he faced was a suspension and a $5,000 fine.
I’ll be going to explain his crimes as well as how he got away with basically a slap on his wrist:
FINRA Suspends Francisco Faraco Over Forged Signatures
Francisco Jose Faraco (CRD #5095972) is a former registered broker and investment advisor whose most recent employment was with Morgan Stanley (CRD #149777) in New York, NY. Throughout his career, which began in 2006, Faraco was also associated with J.P. Morgan Securities LLC, Santander Securities, and Merrill Lynch, serving in both New York and Miami.
Faraco is no longer registered with any FINRA-member firm and has exited the brokerage industry, but his career ended under scrutiny due to a series of compliance violations and customer complaints.
Loan Application Misconduct and Signature Forgery
The most serious allegations against Faraco stem from a 2016 incident involving a $15 million loan application on behalf of an institutional client through Morgan Stanley Private Bank. During the loan process, two critical issues emerged: one involved an expired passport for an individual connected to the application, and the other revolved around two forged signatures on assurance documents tied to collateral.
Rather than waiting for proper documentation, Faraco chose to push the loan forward by forging the signatures of two representatives from affiliated companies. He later claimed he believed the documents were duplicates and considered his actions a way to streamline the process.
Despite these serious lapses, the loan was approved by the bank, and the fraud only came to light after one of the affiliated companies filed a complaint about the forged documents. Even after the misconduct was exposed, both the client and the bank reaffirmed their interest in the loan agreement. However, the deception was sufficient grounds for disciplinary action.
Disciplinary Action and FINRA Suspension
As a result of this incident, Faraco entered into a formal disciplinary agreement with the Financial Industry Regulatory Authority (FINRA). On June 18, 2018, he signed an Acceptance, Waiver & Consent (AWC) letter acknowledging the misconduct without admitting or denying the findings. The agreement included a three-month suspension from acting in any capacity for a FINRA-member firm and a $5,000 fine.
The suspension was enforced from August 6, 2018, through November 5, 2018.
In a separate but related disclosure, Morgan Stanley terminated Faraco’s employment on February 1, 2017, citing “allegations related to authenticity of signatures on two client documents and the alteration of another client document in connection with a loan requested by the client.” This was the second regulatory disclosure tied to the same misconduct.
Earlier Customer Dispute
Prior to the loan-related forgeries, Faraco was already the subject of a customer complaint filed on September 8, 2016. The client alleged that Faraco executed an unauthorized bond transaction, seeking $10 million in damages. Although the specifics of the trade are not disclosed in public records, the case was settled for $1.75 million, indicating a significant financial dispute and potential violation of client trust.
Current Regulatory Standing
Faraco has not registered with any other firm since his dismissal from Morgan Stanley. Aside from the incidents mentioned above, he has no other disciplinary history with FINRA.
Investor Guidance and Legal Help
Investors who worked with Francisco Faraco particularly those involved in bond transactions or complex lending arrangements are encouraged to review their account history for signs of unauthorized activity or document irregularities.
Silver Law Group, a national securities arbitration and investment fraud law firm, is currently reviewing cases involving former clients of Francisco Faraco. The firm represents investors in disputes involving unauthorized trading, forgery, breach of fiduciary duty, and other types of stockbroker misconduct.
Silver Law Group operates on a contingency fee basis, meaning clients do not pay legal fees unless the firm recovers compensation on their behalf.
FINRA Issues Letter of Acceptance, Waiver, and Consent
To settle allegations of misconduct, former registered representative Francisco Jose Faraco (CRD #5095972) submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA), pursuant to FINRA Rule 9216.
In doing so, Faraco agreed to resolve the matter without admitting or denying the findings, and on the condition that FINRA would not pursue further actions based on the same facts. Faraco entered the securities industry in 2006 and worked with several FINRA-member firms, most recently Morgan Stanley, which terminated his registration in March 2017 over concerns related to forged client signatures and document alterations tied to a $15 million loan. Though he is no longer registered with any firm, FINRA retains jurisdiction under its bylaws. Faraco has no prior disciplinary history.
The investigation revealed that, in 2016, while acting as a financial advisor at Morgan Stanley, Faraco altered the expiration date on a passport and forged signatures on two assurance documents to expedite the loan process for an institutional client. These actions violated FINRA Rule 2010, which mandates high standards of commercial honor.
As part of the settlement, Faraco consented to a three-month suspension from associating with any FINRA member firm and a $5,000 fine. He also waived procedural rights, including a formal complaint, hearing, and appeal.
Faraco acknowledged that the AWC would become part of his permanent disciplinary record and agreed not to publicly deny the findings or create the impression that the agreement lacks factual basis.
He was informed that FINRA may publish the AWC and that he could submit a Corrective Action Statement outlining steps taken to prevent future misconduct. Faraco certified that he read and understood the AWC terms and agreed voluntarily, without coercion or external inducement.
Regulatory Enforcement in U.S. Securities Markets
FINRA Disciplinary Actions on the Rise
According to FINRA’s recent Regulatory Operations Key Data, in 2024:
- 730 new disciplinary actions were filed (including formal complaints, AWCs, Minor Rule Violations) — up from 610 in 2023.
- 182 individuals were barred and 354 suspended from association with FINRA firms — up from 178 and 257, respectively.
- Firms faced 4 expulsions and 4 suspensions in 2024.
- 75,125 advertisements and communications were reviewed (vs. 67,239 in 2023), and 11,908 investor complaints were filed directly — an increase over previous years.
- FINRA also referred 1,369 market abuse cases to the SEC or law enforcement r.
A separate Sanctions Study highlighted a surge: 552 disciplinary actions occurred in 2024, marking a 22% increase over 2023’s 453. However, total fines decreased:
- $59 million in fines (down 35% from $89M in 2023)
- $23 million in restitution (up 207% from $7.5M)
- Combined monetary sanctions totaled $87M, a 14% drop from $101M in 2023.
These figures reveal FINRA’s growing focus on investor recovery, with rthe estoration of client funds overtaking punitive fines.
Fines & Restitution Breakdown
FINRA imposed $59.8 million in fines in 2024 and supported $89.3 million in spending using fines and reserves. The gap was covered from operating reserves. This funding supports compliance, enforcement efforts, and investor protection programs.
SEC Enforcement: Record Penalties & Strategic Shift
In fiscal year 2024, the SEC:
- Filed 583 enforcement actions — a 26% decline from 2023.
- Among these, 431 were standalone cases, 93 were administrative actions against individuals, and 59 were issuer-related.
- Among these, 431 were standalone cases, 93 were administrative actions against individuals, and 59 were issuer-related.
- Obtained a record $8.2 billion in financial remedies ($6.1B disgorgement; $2.1B penalties) — the highest ever recorded.
- Launched notable cases tied to AI misstatements, social-media-driven fraud, insider trading, off-channel communication lapses, and crypto fraud.
- Returned $345 million to harmed investors, with over $2.7 billion distributed since 2021.
A notable enforcement wave included fines totalling $390 million against 26 firms over unauthorized text communications.
State-Level Enforcement
State securities regulators, under the North American Securities Administrators Association (NASAA), handled 8,768 investigations in 2024 including 5,155 new cases.
Emerging Themes in Enforcement
- Recordkeeping & Off-Channel Communications: A key target, with ~$600M levied against firms for non-compliant messaging systems (e.g., WhatsApp, Signal).
- Crypto and AI Fraud: The SEC focused heavily on AI misstatements and crypto fraud, including a historic $4.5B Terraform Labs penalty.
- Market Integrity & Investor Protection: FINRA’s spike in restitution orders highlights a stronger emphasis on compensating harmed investors.
- Whistleblower Impact: SEC’s whistleblower program has returned over $4.8 billion since inception, encouraging robust tip submissions.
What This Means for the Industry
- Firms face heightened regulatory scrutiny, especially on communications, compliance infrastructure, and internal controls.
- Investor payouts are rising, signaling a regulatory shift from punishment toward restitution.
- Firms must enhance supervision of digital communication channels, AI disclosures, and crypto-related practices.
- Whistleblower activity continues as a vital mechanism driving enforcement through tip-based investigations.
Final Thoughts
2024 marked a turning point in securities regulation enforcement:
- FINRA increased case volume, with a notable emphasis on investor restitution.
- The SEC secured historic fines, particularly on crypto fraud and communications compliance.
- State authorities remain active, augmenting federal oversight.
You must have noticed. For the magnitude of financial crimes Faraco has committed, he hasn’t faced any serious consequences. There are countless cases like these. It’s almost as if white collar criminals are treated differently. It also shows how depraved our justice system is. Be extremely careful when hiring a financial advisor. You’d lose your savings and he/she wouldn’t face any punishment whatsoever.
