FINRA sanctions Aegis Capital for $2.8 million including $1.7 million in restitution to customers for excessive and unsuitable trading in Aegis’ customer accounts. The remaining $1.1 million of the sanction represents a fine by FINRA for Aegis’ supervisory violations.
FINRA investigated and identified Aegis’ failure to design and implement a reasonably effective supervisory system to comply with FINRA’s suitability requirements for the period of July 2014 through December 2018. As such, Aegis failed to recognize potentially excessive and unsuitable trading in customer accounts. Aegis also failed to act on 700 out of 900 exception reports specifically designed to identify red flag activity in Aegis’ customer accounts.
Following the investigation, FINRA sanctioned Aegis Capital for a combined $2.8 million comprised of $1.7 million in restitution and a $1.1 million fine.
During the relevant time period, Joseph Michael Giordano was a branch manager in Aegis’ Melville location. He was required by Aegis’ procedures to monitor trading for suitability during his daily review of the branch trade blotter. Although Giordano was responsible for the daily review of trade blotters, he delegated the task to Roberto Birardi.
Roberto Birardi was not provided any training to properly review the trade blotters each day. Joseph Giordano also failed to check Birardi’s work other than to confirm that the review had been completed. Due to his lack of training, Birardi performed only superficial reviews of customer accounts. He failed to perform necessary calculations to determine turnover and cost to equity rates in customer accounts. Birardi also did not perform proper suitability reviews.
Both Joseph Michael Giordano and Roberto Birardi have been fined and suspended for failing to respond to 700 of 900 exception reports. Based on their supervisory violations, Joseph Giordano was fined $10,000 and given a six-month suspension from association with any FINRA member in any principal capacity, and mandatory additional continuing education training regarding supervisory responsibilities. Birardi was fined $5,000, suspended from association from any FINRA member in any principal capacity, and required to attend and complete additional continuing education regarding supervisory responsibilities.
FINRA has also reached settlements with some of the Aegis representatives involved. Two Aegis representatives were barred for churning and excessive and unauthorized trading. Two other Aegis representatives were suspended and fined for excessive trading.
Current and former customers of Aegis Capital with losses exceeding $100,000, and who may have information relating to the manner in which their Aegis broker handled their accounts, are encouraged to contact Lawrence L. Klayman, Esq., at (561) 542-5131.
KlaymanToskes is a leading national securities law firm that practices exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $220 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico.
KlaymanToskes
Lawrence L. Klayman, Esq. (561) 542-5131
lklayman@klaymantoskes.com