Aegis Capital Corp. Fined $1.3 Million for Anti-Money Laundering and Supervision Rule Violations
Posted on Tuesday, April 17th, 2018 at 12:45 pm
In March 2018, FINRA fined Aegis Capital Corp. $550,000 for failing to have adequate supervisory and anti-money laundering (AML) programs tailored to detect “red flags” or suspicious activity connected to its sale of low-priced securities. Additionally, the Securities and Exchange Commission (SEC) fined Aegis Capital Corp. $750,000 in a separate action involving anti-money laundering violations by the firm. Erez Law is interested in speaking with investors who may have suffered losses due to investments with Aegis Capital Corp. investors across the country.
According to FINRA, “Aegis’ supervisory system for trading in delivery versus payment (DVP) accounts was not reasonably designed to satisfy its obligation to monitor and investigate trading in DVP accounts, particularly in low-priced securities transactions. In a DVP account, customers buy and sell securities that are not held at the brokerage firm executing the trades, and the purchases and sales of those shares are then effected through the brokerage firm.” FINRA also found that Aegis Capital Corp. failed to adequately monitor or investigate trading in seven DVP customer accounts that liquidated billions of shares of low-priced securities and generated millions of dollars in proceeds for its customers. Aegis Capital Corp. did not identify these trades as suspicious even after its clearing firm alerted Aegis to AML red flags and specific suspicious low-priced securities transactions. These violations were accompanied by a failure to implement an adequate AML program tailored to detect red flags associated with these sales.
Aegis Capital Corp. admitted that it failed to file Suspicious Activity Reports (SARs) on numerous suspicious transactions and was fined $750,000 by the SEC. Brokerage firms are required to file SARs for certain transactions suspected to involve fraudulent activity or have no business or apparent lawful purpose. According to the SEC, the order “found that Aegis failed to file SARs on suspicious transactions that raised red flags indicating the transactions were potentially related to the market manipulation of low-priced securities… The SEC’s order found that Aegis willfully violated an SEC financial recordkeeping and reporting rule.”
In separate orders, Aegis Capital Corp. Chief Executive Officer (SEO) Robert Eide (CRD# 1015261) was found to have caused the firm’s violations and was fined $40,000. Former anti-money laundering (AML) compliance officer Kevin McKenna (CRD# 1343870) was found to have aided and abetted the firm’s violations and was fined $20,000. McKenna also agreed to a prohibition from serving in a compliance or AML capacity in the securities industry with a right to reapply. Another former compliance officer, Eugene Terracciano (CRD# 1829676), also failed to file SARs on behalf of Aegis Capital Corp. Terracciano is alleged to have aided and abetted and caused Aegis’ violations.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, Aegis Capital may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.Disclaimer: Clients are responsible for costs. Contingency fee is calculated before deducting costs incurred in the case.