Aegis Capital Fined $2.8 Million for ‘Excessive and Unsuitable’ Trades

Penalty Included $1.7 Million in Restitution and $1.1 Million for Failure to Supervise

On November 9, 2021, the Financial Industry Regulatory Authority (FINRA) announced a $2.8 million financial penalty against Aegis Capital Corp. The fine includes $1.7 million in restitution to the dozens of customers whose accounts were excessively and unsuitably traded. In addition, the regulator imposed a $1.1 million fine for the company’s supervisory failures.

The national securities and investment fraud law firm Levin Law, P.A. (“Levin Law”) is investigating claims of excessive and unsuitable trading against Aegis Capital Corp. If you suffered financial losses as a result of the recommendations of an Aegis registered representative, contact attorney Brian Levin at (305) 402-9050 or email contact@levinlawpa.com for a free case evaluation.

Excessive and Unsuitable Trading

According to a FINRA news release, the agency found that from July 2014 to December 2018, Aegis Capital Corp failed to identify trading that did not meet the suitability requirements of FINRA Rule 2111. According to the release, at least 8 Aegis registered representatives engaged in excessive trading on 31 customers’ accounts. 

The excessive and unsuitable trading resulted in an estimated $2.9 million in costs and $4.6 million in cumulative losses. Despite red flags regarding potential excessive and unsuitable trading, the broker-dealer did nothing to stop the trading. Over 900 exception reports were generated, noting “potentially unsuitable turnover rates and commission-to-equity ratios,” but were never addressed.

Failure to Supervise

It is also alleged that from July 2014 to June 2019, the company failed to “establish, maintain, and enforce a supervisory system” in compliance with FINRA Rules 3110 and 2010. Hundreds of exception reports were generated identifying potential violations, including excessive trading, but these reports were never reviewed. 

Aegis failed to investigate over 50 customer complaints alleging “excessive, unsuitable or unauthorized trading.” As noted by FINRA, despite receiving numerous “red flags,” the company failed to act. 

As a result of the broker-dealer’s failure to supervise, designated supervisors Joseph Giordano and Roberto Birardi both agreed to multi-month supervisory suspensions, fines, and 20 hours of continuing education. 

Sanctions Ordered Against Aegis

In total, 68 customers were affected by the company’s failure to supervise and potentially excessive and unsuitable trade practices. In many cases, customers suffered losses of tens of thousands of dollars as a result of these violations. 

In addition to the financial penalty, Aegis agreed to a censure and was required to implement the recommendations received from an independent consultant. They were also required to establish an adequate supervisory system and written supervisory procedures (WSPs) “reasonably designed to achieve compliance” with FINRA rules and regulations.

Contact Levin Law for Free Case Evaluation

If you have suffered losses related to an Aegis registered representative’s excessive and unsuitable trade practices or the broker-dealer’s failure to supervise, contact Levin Law, P.A. for a free case evaluation. 

Levin Law founder and managing partner Brian Levin has helped recover millions of dollars on behalf of clients worldwide. Call (305) 402-9050 or email contact@levinlawpa.com to speak directly with Attorney Levin. Most cases are accepted on a contingency fee basis, meaning that clients are not obligated to pay Levin Law’s attorney fees unless money is recovered on their behalf.

About Levin Law

Levin Law is a premier national cryptocurrency, securities, commodities, futures, and class action law firm. Brian Levin, Levin Law’s founding attorney, has helped recover in excess of $150,000,000 through arbitration and litigation for individual and institutional investors throughout the country and the rest of the world. Levin Law represents retirees, individual investors, high-net-worth investors, ultra-high-net-worth investors, institutions, family offices, trusts, publicly held companies, and others.