The White Law Group reviews the regulatory history of Aegis Capital Corp.
Aegis Capital Corp., (CRD #15007, New York, NY) is a mid-sized broker-dealer based in New York City. Aegis Capital Corp. was apparently at the top of the list of the worst ranked brokerage firms in the securities industry from 2007-2016, according to a report by the Securities Litigation & Consulting Group (SLCG).
The SLCG’s white paper “Rating Brokerage Firms by Their Complaint Histories Rather Than by Their Brokers’ Histories” found that while “only 2.6 percent of the brokers at firms with more than 200 brokers have customer complaints, Aegis Capital (24.49 percent) employs bad brokers (with complaints) at nearly 10 times that rate.”
Regulatory actions taken against a broker-dealer may include censures, fines, suspensions and restitution, among others. They can have serious consequences for a broker-dealer’s profile and reputation. The following is a review of FINRA and the SEC’s regulatory actions involving Aegis Capital Corp.
Aegis Capital Corp. reportedly has 38 disclosure events on its CRD/ broker report, including 37 regulatory events and 1 arbitration.
FINRA Censures and Fines Aegis Capital Corp.
November 2021 – FINRA reportedly censured and fined Aegis Capital Corp. $2.8 million, including $1.7 million in restitution to 68 customers whose accounts were allegedly excessively and unsuitably traded by the firm’s representatives. The regulator also imposed a $1.1 million fine for Aegis’s alleged supervisory violations.
Aegis supervisors failed to notice that eight Aegis reps purportedly excessively and unsuitably traded customer accounts between 2014 and 2018, generating $2.9 million in trading costs that would have required the investments to generate more than 71% returns to offset costs.
Aegis allegedly failed to implement a supervisory system reasonably designed to comply with the regulator’s suitability rule. Aegis Capital Corp. Hit with $2.8M for Excessive Trades
March 2021 – FINRA censured and fined Aegis Capital Corp. for allegedly failing to give favorable pricing to customers in connection with 26 corporate bond transactions. Aegis reportedly also violated Municipal Securities Rulemaking Board Rules G-30 and G-17. Aegis was censured and fined $80,000 and ordered to pay restitution to customers in the total amount of $43,912.89 plus interest. Aegis Capital Corp. Fined for Bond Overcharges
July 2019 The Financial Industry Regulatory Authority (FINRA) censured and fined Aegis Capital Corp. $93,125 for its alleged failure to file certain documents specified with FINRA after it had filed such documents with the SEC. According to FINRA, these documents have yet to be filed with FINRA. In addition, the firm filed certain documents between four days and over two years late. In connection with two prospectuses, the firm purportedly failed to disclose a total of $14,000 in fees and compensation for the underwriter’s counsel, according to FINRA’s findings. Aegis Capital Corp. Censured & Fined $93,125
The SEC Sanctions Aegis Capital Corp.
March 2018 – According to the Securities and Exchange Commission, the regulator censured Aegis after it found that from at least late 2012 through early 2014, Aegis reportedly failed to file Suspicious Activity Reports (“SARs”) on hundreds of transactions when it knew, suspected, or had reason to suspect that the transactions involved the use of the broker-dealer to facilitate fraudulent activity or had no business or apparent lawful purpose. Many of the transactions involved red flags of potential market manipulation, including high trading volume in companies with little or no business activity during a time of simultaneous promotional activity. Aegis reportedly did not file SARs on these transactions even when it specifically identified AML red flags implicated by these transactions in its written supervisory procedures. The firm was fined $750,000 and ordered to cease and desist.
March 2018 – The SEC fined Aegis $550,000 for supervisory issues related to penny stock transactions.
March 2017 – FINRA censured and fined Aegis Capital Corp. $52,000 and ordered to pay $615.87, plus interest, in restitution to investors; and required to revise its WSPs. Apparently, the order memoranda failed to document the correct information regarding orders and these tickets improperly indicated that the orders were “held” orders. The findings also stated that in transactions for or with a customer, the firm reportedly failed to execute a customer order fully and promptly.
August 2015 – According to a settlement with FINRA, the firm agreed to pay $950,000 over allegations of improper sales of billions of shares of unregistered penny stocks and anti-money- laundering supervisory lapses. Two former chief compliance officers at the firm also were suspended and fined over the charges.
Broker Misconduct and Customer Complaints
All broker-dealers have a responsibility to adequately supervise its employees. They must ensure the necessary procedures and systems to detect misconduct. There have been several cases of registered representatives employed by Aegis Capital Corp. who were allegedly involved in broker misconduct and fraudulent activities. When brokers violate securities laws, such as making unsuitable investments, the brokerage firm they are working with may be liable for investment losses through FINRA Arbitration.
September 2022 – FINRA barred Aegis broker Alan Z. Appelbaum from the securities industry after allegations of unsuitable sales of complex structured products. The Securities and Exchange Commission reportedly filed a complaint in July 2022 against Appelbaum alleging that Appelbaum was making unsuitable recommendations and engaging in unauthorized trading. 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 did not pay a fixed amount of principal at maturity. As a result, 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. Aegis Broker Alan Z. Appelbaum Barred after Allegations
March 2022 – FINRA reportedly suspended Aegis broker Scott Hananel for fifteen months for alleged excessive and unsuitable trading in customer accounts. The findings stated that because Hananel exercised de facto control over his customers’ accounts. Hananel’s short term trading in the customers’ accounts was allegedly excessive and unsuitable given the customers’ investment profiles, generating significant losses and trading costs in the form of commissions, markups and markdowns. His customers, some who were senior citizens, paid commissions and trading costs of $1,473,118.00 and incurred losses of $2,103,176, according to FINRA. Hananel reportedly exercised discretionary trading authority in customer accounts without authorization or approval from Aegis. Scott Hananel Suspended for Excessive Trading
Potential FINRA Claims to Recover Investment Losses
The White Law Group represents investors in FINRA claims against their broker dealers. If you have suffered losses due to broker negligence or broker fraud, we can help. Our firm can evaluate the strength of your case, draft a well-structured statement of claim that accurately presents your allegations of fraud and desired damages, and provide representation during the arbitration hearing by presenting evidence and making compelling arguments on your behalf. Additionally, an attorney can engage in negotiation efforts for a potential settlement before the arbitration process begins. Opting for our securities attorneys will ensure that your rights are safeguarded throughout the arbitration process, maximizing your likelihood of achieving a favorable resolution.
If you have concerns regarding investments with Aegis Capital Corp. please call The White Law Group at 888-637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to helping investors in claims in all 50 states against their financial professional or brokerage firm. Since the firm launched in 2010, it has handled over 700 FINRA arbitration cases.
Our firm represents investors in all types of securities related claims, including claims involving stock fraud, broker misrepresentation, churning, unsuitable investments, selling away, and unauthorized trading, among many others.
With over 30 years of securities law experience, The White Law Group can help you recover your investment losses.
With offices in Seattle, Washington and Chicago, Illinois, the firm reviews securities fraud cases throughout the country. For more information on The White Law Group, please visit https://whitesecuritieslaw.com.
Tags: Aegis Capital corp, broker-dealer review, failure to supervise, finra sanctions Last modified: August 17, 2023