**Update: November 11, 2021** On November 8, 2021, Aegis Capital Corp agreed to pay nearly $2.7 million in sanctions for supervisory failures related to excessive and unsuitable trading by its brokers from July 2014 through December 2018. Click on the following link to read more: Aegis Capital Corp. Ordered to Pay Nearly $2.7 Million for Supervisory Failures Related to Rampant Excessive and Unsuitable Trading
Customers of Aegis Capital, including customers that have been notified that they may be receiving restitution, should consult with a securities arbitration law firm. If you or a loved one were a customer of Aegis Capital, contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of your legal rights.
FINRA Files Enforcement Action Against Aegis Capital Broker Daniel O’Neill – Melville, New York
FINRA’s Department of Enforcement has filed a disciplinary proceeding complaint against financial advisor Daniel O’Neill over excessive and unsuitable trading in a customer’s account.
If you have lost money with Daniel O’Neill, or Aegis Capital, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
Iorio Altamirano LLP represents investors in disputes with their financial advisors or brokerage firms, such as Aegis Capital.
FINRA Disciplinary Proceeding No. 2021070337301
On July 29, 2021, the FINRA Department of Enforcement filed a complaint against broker Daniel O’Neill.
The complaint alleges that Mr. O’Neill, while associated with FINRA member Aegis Capital, excessively and unsuitably traded the account of one of his customers from July 2014 through June 2015. Mr. O’Neill controlled the trading in the customer’s account and, during this time period, executed 456 trades (many of which were unauthorized) with a total principal value of approximately $22.9 million.
Mr. O’Neill’s excessive and unsuitable trading in the customer’s account resulted in an annualized turnover rate of 51.4 and an annualized cost-to-equity ratio (or break-even point) of 63.7% and caused customer losses of $147,411.
At the same time, Mr. O’Neill’s trading generated gross sales credits and commissions of $110,446, of which Mr. O’Neill received at least $66,000. By engaging in excessive and unsuitable trading in the customer’s account, Mr. O’Neill violated FINRA Rules 2111 and 2010.
FINRA Rule 2111, also known as the suitability rule, requires that an associated person “who has actual or de facto control over a customer account to have a reasonable basis for believing that a series of recommended transactions, even if suitable when viewed in isolation, are not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile.” A violation of FINRA Rule 2111 also constitutes a violation of FINRA Rule 2010, which requires associated persons to “observe high standards of commercial honor and just and equitable principles of trade.”
Mr. O’Neill also executed 183 trades with a total principal value of approximately $8.1 million in the customer’s account without the customer’s prior authorization. By engaging in unauthorized trading in the customer’s account, Mr. O’Neill violated FINRA Rule 2010.
What Constitutes Excessive Trading?
Excessive trading occurs when a financial advisor makes many trades in a customer’s account, not to benefit the customer but to generate commissions for the broker.
There are two primary indicators used to evaluate whether a financial advisor excessively traded an account. The first is turnover rate, which represents the number of times a portfolio of investments is replaced for another portfolio of investments. Generally, a turnover rate of six suggests excessive trading, but a turnover rate below four can be excessive in some cases. According to FINRA, the account at issue had a turnover rate of 51.4.
The second indicator used to assess whether trading is excessive in an investment account is its cost-to-equity ratio. The cost-to-equity ratio measures the amount an account must appreciate to cover commissions and other expenses. That is, how much the account needs to grow just to break even. A cost-to-equity ratio of 20% generally indicates excessive trading has occurred. According to FINRA, the account at issue had a cost-to-equity ratio of 63.7%.
Aegis Capital Corp: 2021 Disciplinary Actions
Mr. O’Neill worked out of the firm’s branch office in Melville, New York, like brokers Douglas Szempruch (suspended in July 2021 for excessive trading in six customer accounts), Corey Johnson (suspended in March 2021 for engaging in discretionary trading without written authorization) and Steven Luftschein (barred from the securities industry in January 2021 for churning and excessively trading customers’ accounts).
In January 2021, FINRA also suspended former Aegis Capital broker Anthony (Tony) Tricarico from the securities industry for six months for excessively and unsuitably trading three clients’ accounts registered with Aegis.
In March 2021, FINRA suspended former Aegis Capital broker Edmund Zack for excessive trading and using discretion without prior authorization.
Another broker, Kishan (Sean) Parikh), was suspended by FINRA earlier this month for both excessive and unauthorized trading.
Most recently, Aegis Capital broker Gilbert Kuta was suspended by FINRA for ten days for exercising discretion without written authorization in customers’ accounts. The alleged misconduct occurred while Mr. Kuta was registered with another firm.
Separately, Aegis Capital itself was sanctioned by FINRA and ordered to pay restitution to customers for a series of violations.
|January 13, 2021||Steven Luftschein||Churning and Excessive Trading||Barred|
|January 22, 2021||Anthony (Tony) Tricarico||Excessive Trading||Suspended for 6 months|
|March 10, 2021||Aegis Capital Corp.||Best Execution Violations||Censured, Fined, Restitution|
|March 19, 2021||Edmund Zack||Excessive Trading and Exercising Discretion Without Authorization (Unauthorized Trading)||Suspended for 8 months|
|March 23, 2021||Corey Johnson||Exercising Discretion Without Authorization (Unauthorized Trading)||Suspended for 30 days|
|July 7, 2021||Kishan (Sean) Parikh||Excessive Trading and Unauthorized Trading||Suspended for 18 months|
|July 9, 2021||Douglas Szempruch||Excessive Trading and Exercising Discretion Without Authorization (Unauthorized Trading)||Suspended for 12 months|
|July 29, 2021||Gilbert Kuta||Exercising Discretion Without Authorization (Unauthorized Trading)||Suspended for 10 days|
Aegis Capital has a long history of allegations of wrongdoing.
In 2017, Aegis was included in a Reuters study that analyzed FINRA data and identified 48 firms whose brokers have been flagged for serious incidents. The Reuters’ analysis showed that Aegis Capital had 39% of its brokers with at least one of the most serious red flags, per the study, on their public disclosure reports.
The alleged conduct by the brokers that have been sanctioned this year, such as excessive trading, churning, and unauthorized trading, are common practices for “boiler room” broker-dealers.
Aegis Capital – A Duty to Supervise
Financial institutions like Aegis Capital must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as annuity switches, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
Daniel O’Neill (CRD#: 1358245)
Mr. O’Neill had 36 years of experience in the securities industry and was registered as a broker with Aegis Capital in Melville, New York between, April 23, 2013, and July 29, 2021.
According to Mr. O’Neill’s public FINRA CRD, Aegis discharged him on July 29, 2021. The firm indicated that the “[r]epresentative failed to keep the firm apprised of the status of the pending enforcement investigation[,] which resulted in the initiation of a formal enforcement proceeding against the representative. Representative named in an enforcement proceeding alleging conduct inconsistent with firm standards.”
Mr. O’Neill’s CRD also shows two customer disputes, one of which is still pending. The other matter settled.
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Daniel O’Neill, or Aegis Capital, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at email@example.com or toll-free at (855) 430-4010 for a free and confidential evaluation of your account.
Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. We pursue FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.