FINRA Accuses Aegis Capital Corp of Selling Unregistered Penny Stocks

Aug. 27, 2015
Thomas Frost

Penny StocksAegis Capital Corp agreed to pay $950,000 to settle FINRA’s claims that it improperly sold billions of shares of unregistered penny stocks.  FINRA also suspended and fined Aegis chief compliance officers, Charles D. Smulevitz and Kevin C. McKenna, for failing to adequately supervise the firm’s activities.

Securities generally must be registered with the SEC to ensure issuers disclose material information to investors.  FINRA’s investigation revealed that between April 2009 and June 2011, Aegis liquidated approximately 3.9 billion shares of five separate penny stocks that were not registered with the SEC and not exempt from registration.

“There were many ‘red flags’ associated with the transactions,” according to FINRA, “including that the customers were referred to Aegis by a single former securities broker who was barred from the industry and who controlled the activity in several of the Aegis accounts. Without conducting a reasonable inquiry into the red flags, Aegis sold the unregistered shares in violation of the registration requirements of the securities laws.”

Publicly available records indicate Aegis has a history of regulatory problems related to supervisory failures at the firm.

The foregoing publicly available information has been provided by The Frost Firm, a boutique securities law firm in San Diego, California, focused on securities arbitration, securities fraud, and protection of public investors.

If you are concerned about investments made at Aegis Capital Corp and wish to speak to a securities fraud attorney, please contact The Frost Firm at (619) 822-1740.

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