Alan Appelbaum was registered with Aegis Capital Corp. in Boca Raton, Florida from 2015 to 2021, when he was terminated regarding, “Failure to follow firm procedures. Exercised discretion without client’s written authorization.” Previously, Alan Appelbaum was registered with Herbert J. Sims & Co. Inc. in Boca Raton, Florida from 2002 to 2015.
In July 2006, Appelbaum was sanctioned by the state of New Hampshire and ordered to pay a fine of $55,000. The state found that Alan Appelbaum serviced eight brokerage accounts for New Hampshire residents, even though Alan Appelbaum was not licensed to sell securities in New Hampshire.
In July 2022, the Securities and Exchange Commission (SEC) charged Aegis Capital Corp., Alan Appelbaum, and former Aegis registered representative Paul Gallivan in connection with unsuitable recommendations of structured products to certain of Aegis Capital Corp.’s retail customers. The SEC complaint alleged that “he made unsuitable recommendations of highly complex variable interest rate structured products (“VRSPs”) to seven customers. As the complaint alleges, despite the risky nature of the VRSPs, Appelbaum recommended these securities for seven customers who had a “moderate” risk tolerance, were unwilling to lose their entire invested principal, and typically had investment time horizons that were inconsistent with the VRSP maturity dates. The complaint further alleges that Appelbaum made materially false and misleading statements to customers in connection with his recommendation of the VRSPs and engaged in unauthorized trading.”
As part of this case, the SEC “instituted a settled administrative proceeding against Aegis, finding that fourteen Aegis brokers recommended VRSPs to forty-eight customers for whom the VRSPs were unsuitable in light of the customers’ financial situation and needs, as reflected by their risk tolerance, investment objectives, age, investment experience, liquidity needs, and investment time horizon… The order further finds that Aegis failed to reasonably supervise its registered representatives.” Aegis Capital Corp. was censured and ordered to pay $220,865 in disgorgement plus prejudgment interest and a $2.3 million civil penalty.
In September 2022, FINRA barred him after he “consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its examination into his sales of complex structured products.”
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, Herbert J. Sims & Co. Inc. may be liable for investment or other losses suffered by Alan Appelbaum’s customers.
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