FINRA Reportedly Bars Alan Appelbaum, of Aegis, after SEC charges him with Unsuitable, Unauthorized Trades 

According to a Letter of Acceptance Waiver and Consent, on September 9, 2022, financial advisor Alan Z. Appelbaum reportedly agreed to sanctions by the Financial Industry Regulatory Authority to be barred from the securities industry after he allegedly failed to provide information in its investigation.  

FINRA’s investigation was reportedly in connection into Appelbaum’ s sales of complex structured products, according to the letter.  

According to his FINRA BrokerCheck profile, the Securities and Exchange Commission reportedly filed a complaint on July 28, 2022, against Appelbaum alleging that from at least July 2017 through at least May 2019, Appelbaum disregarded his obligations to his customers and repeatedly violated the antifraud provisions of the federal securities law by making unsuitable recommendations and by engaging in unauthorized trading.  

Specifically, from July 2017 to May 2019, Appelbaum allegedly made over 140 unsuitable recommendations and purchases of highly complex structured products for seven retail customers. Unlike conventional debt securities, these variable rate interest structured products that Appelbaum recommended and purchased for his customers did not pay a fixed amount of principal at maturity.  

Instead, the structured products had a complicated structure under which recovery of principal at maturity was contingent upon the operation of derivative features tied to equity indexes, such as the Standard and Poor’s 500 or the Russell 2000 stock market indexes. See:   Variable Interest Rate Structured Products – Securities Fraud Attorneys –   

As a result, customers could lose a portion or all of their investment, even if the issuer of the structure product did not default. Interest payments to customers owning the investments were also contingent upon the operation of derivative features typically tied to equity indexes, as well as the spreads between long-term and short-term United States bond yield curves.  

Structured Products are High Risk Investments

Although the structured products paid a fixed interest rate for an initial period that was typically one to three years, the investments were not guaranteed to pay any interest thereafter and, in fact, sometimes did not pay any monthly or quarterly interest. The structured products, most of which had maturity periods of fifteen years or more, offered no assurance of liquidity and typically sold in the secondary market at a significant discount to its face value.  

Despite the risky nature of these securities, Appelbaum purportedly recommended variable interest rate structure products and allegedly purchased them for seven customers who had a “moderate” risk tolerance, were unwilling to lose their entire invested principal, and typically had investment time horizons that were inconsistent with the investments’ maturity dates.  

Appelbaum purportedly knew, and according to the SEC, was reportedly reckless in not knowing, or should have known that these securities were unsuitable for those customers. In recommending and purchasing the allegedly unsuitable structured products, Appelbaum allegedly made material misrepresentations and omissions regarding the suitability of the investment to these seven customers.  

Appelbaum also reportedly falsely and misleadingly told multiple customers that the variable interest rate structured products would pay off eventually and allegedly omitted the fact that his customers could lose some or all of their principal investment.  

From September 2015 through May 2019, Appelbaum also allegedly executed hundreds of unauthorized trades in the same seven customers’ brokerage accounts without their consent, including trades in variable interest rate structured products that were purportedly unsuitable for those customers.  

As a result of these alleged unsuitable and unauthorized trades, Appelbaum reportedly received at least $1 million in compensation. Some of Appelbaum’s customers purportedly suffered significant losses, including one customer who lost over $1 million and another who lost over $200,000.  

According to his broker record, Appelbaum was reportedly affiliated with the following firms during his career: 

07/08/2015 – 05/14/2021, AEGIS CAPITAL CORP. (CRD#:15007), BOCA RATON, FL,  

B, 06/05/2002 – 07/06/2015, HERBERT J. SIMS & CO. INC. (CRD#:3420), BOCA RATON, FL 

Appelbaum reportedly has 20 disclosure events on his record, including 14 customer complaints, 4 regulatory events, and an employment separation among others.  

FINRA Lawsuits to Recover Investment Losses   

The White Law Group is investigating potential securities claims involving former Alan Appelbaum and the liability that his former employer, Aegis Capital Corp., may have for failure to properly supervise him.  

When brokers abuse client accounts or conduct transactions that violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses. Brokerage firms that fail to monitor the business activities of their employees may be liable for investment losses due to negligent supervision for the misconduct of their employees.        

The brokerage firms can be held responsible for any losses in a FINRA arbitration claim if it is determined that they failed to properly supervise their agent.          

If you are concerned about investments with Alan Appelbaum and Aegis, the securities attorneys of The White Law Group may be able to help you. For a free consultation with a securities attorney, please call 888-637-5510.      

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.      

For more information on The White Law Group, visit www.WhiteSecuritiesLaw.com.