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FINRA Orders Aegis Capital Corp. to Pay Restitution, Fine

By November 9, 2021December 13th, 2021News

FINRA recently sanctioned Aegis Capital Corp. (“Aegis”), ordering the company to pay approximately $2.8 million relating to allegations of excessive and/or unsuitable trades in customer accounts.

Aegis was ordered to pay $1.7 million to 68 customers relating to the trading activities, and FINRA imposed an additional $1.1 million fine for Aegis’s supervisory violations.

According to a FINRA news release:

“FINRA’s case originated from its examination of the firm and a review of a customer’s arbitration complaint. FINRA found that from July 2014 to December 2018, Aegis failed to implement a supervisory system reasonably designed to comply with FINRA’s suitability rule. As a result, Aegis failed to identify and address its representatives’ potentially excessive and unsuitable trading in customer accounts, including trading by eight Aegis representatives who excessively traded 31 customers’ accounts. The trading in these accounts generated average cost-to-equity ratios—that is, the amount the accounts must increase in value just to cover commissions and other trading expenses—of 71.6 percent, and caused the customers to incur more than $2.9 million in trading costs.”

“Aegis, and designated supervisors Joseph Giordano and Roberto Birardi, failed to take reasonable steps to investigate numerous ‘red flags’ indicative of potentially excessive and unsuitable trading by the firm’s registered representatives. The firm failed to act on more than 900 exception reports from its clearing firm that identified potentially unsuitable trading, and more than 50 complaints from customers alleging excessive, unsuitable or unauthorized trading in their accounts. Giordano and Birardi, who were responsible for supervising six of the representatives, failed to respond to 700 of the 900 exception reports. Also, when Aegis’ compliance personnel identified deficiencies with the firm’s systems and procedures used to monitor for potentially excessive trading, Aegis did not promptly address the deficiencies or improve its supervision.”

Giordano agreed to a six-month supervisory suspension and a $10,000 fine, and Birardi agreed to a three-month supervisory suspension and $5,000 relating to the supervisory violations at Aegis Capital Corp.

Fishman Haygood’s Investment Fraud Division has experience bringing claims on behalf of investors who were the victims of excessive and/or unsuitable trading in their investment accounts.

Please contact us to discuss your possible claim.

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