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Former Aegis Capital Corp. Broker Steven Luftschein Investment Loss Options

Posted on Tuesday, October 24th, 2017 at 10:29 am    

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Erez Law is currently investigating former Aegis Capital Corp. broker Steven Luftschein (CRD# 2690117) regarding unsuitable recommendations, unauthorized trades and other securities violations. Luftschein was registered with Joseph Stone Capital L.L.C. in Huntington, New York from May 2017 to May 2018. Previously, Luftschein was registered with following firms over the past few years:

  • Aegis Capital Corp. in Melville, New York (2013 to 2016)
  • John Thomas Financial in New York, New York (2012 to 2013)
  • Rockwell Global Capital LLC in Melville, New York (2011 to 2012)
  • Paulson Investment Company, Inc. in Hauppauge, New York (2010 to 2011)

In May 2020, FINRA named Luftschein in a complaint that alleged that he churned a customer’s account at Aegis Capital Corp. According to the FINRA complaint, “Luftschein controlled the volume and frequency of trading in the customers’ accounts, deciding what securities to buy and sell, the quantities, the price, and when each transaction would occur. Luftschein also frequently made unauthorized trades in these accounts. Luftschein deliberately incurred unreasonably high trading costs in the customers’ accounts, which made it virtually impossible for the accounts to be profitable. Indeed, Luftschein’s trading in the customers’ accounts caused more than $261,000 in losses, while Luftschein received substantial income from trading the accounts. Luftschein also masked the true costs of his trading from customers by placing a high percentage of the trades as riskless principal trades. The complaint also alleges that Luftschein’s trading in the customers’ accounts was excessive and quantitatively unsuitable for the customers, as evidenced by high annualized turnover rates and cost-to-equity ratios, the size and frequency of the transactions, the transaction costs incurred and the customers’ investment objectives and needs. Luftschein did not have a reasonable basis to believe that his trading was suitable. The complaint further alleges that Luftschein effected trades in the customer accounts without first discussing with, and obtaining authorization from, the customers. None of the customer accounts were listed as discretionary accounts. The customers never gave Luftschein discretionary trading authority.”

It further found that Luftschein executed approximately 430 trades in his customer’s accounts, which resulted in annualized turnover rates that ranged from 12.5 to 96.3 and annualized cost-to-equity ratios (or break even points) ranging from 35.6% to 123.8%.

Luftschein has been the subject of 17 customer complaints between 2004 and 2020, three of which were denied, according to his CRD report. Recent complaints are regarding: 

January 2020. “Time frame: unspecified. Claimant alleges excessive and unsuitable trading, false and misleading statements.” The customer is seeking $200,000 in damages in this pending customer complaint. 

May 2018. “Time frame: 2013. Claimant alleges negligence, unauthorized trading, churning, unsuitability, breach of contract, breach of fiduciary duty.” The customer is seeking $150,000 in damages and the case was settled for $132,500.

February 2018. “Time frame: unspecified. Claimant alleges unauthorized trading and unsuitable investment recommendations.” The customer sought $1,461,217 in damages and the case was settled for $569,962.38.

August 2017. “Customers allege unsuitable investment recommendations, unauthorized trading, negligence, negligent supervision, federal securities law violations, Georgia blue sky law violations, control person liability and respondeat superior, breach of fiduciary duty and excessive trading from January 2010 through August 2011.” The customer sought $2,172,561 in damages and the case was settled for $800,000.

April 2017. “Time frame: 04/24/2014 to 05/31/2016. Claimant alleges unsuitable investment recommendations, unauthorized trading, excessive trading, misrepresentations and ommissions, breach of contract and breach of fiduciary duty.” The customer sought $269,131 in damages and the case was settled for $100,000.

June 2016. “Time frame: June 2013 to January 2016. Clients allege unsuitable recommendations and mishandling of their accounts.” The customer sought $2 million in damages and the case was settled for $782,000.

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 Corp. may be liable for investment or other losses suffered by Luftschein’s customers.

Erez Law represents investors in the United States for claims against former Aegis Capital Corp. financial advisor Steven Luftschein regarding unsuitable recommendations, unauthorized trades and other securities violations. If you were a client of Aegis Capital Corp. or another firm, 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.