Investors should be aware of the firm’s most recent regulatory actions. If you want to see the complete list of their regulatory actions, consult their detailed BrokerCheck record.
Variable Interest Rate Structured Products (VRSPs)
According to an SEC Cease-and-Desist Order dated July 28, 2022, Aegis brokers recommended unsuitable and highly complex investments to customers. FINRA Rule 2111 and Regulation Best Interest requires brokerage firms and their representatives to recommend investments that align with their customer’s financial goals and risk tolerance. Aegis brokers allegedly recommend risky variable interest rate structured products (VRSPs) to 48 retail customers.
Further, the SEC alleges that Aegis made material misstatements concerning the VRSPs. Aegis representatives allegedly falsely stated that the VRSPs came with principal protection.
The same Cease-and-Desist Order alleges an Aegis broker engaged in unauthorized trading.
As part of the Offer Settlement, Aegis agreed to repay investors $165,828 plus prejudgment interest, in addition to a civil penalty of $2.3 million to the SEC.
Alleged Failure to Catch Signs of Excessive Commissions
Excessive trading (also known as commission abuse) occurs when a broker executes so many trades in an investor account that the transaction fees make it difficult or impossible for the investor to see a return on their investments. On November 8, 2021, FINRA alleged in an Acceptance, Waiver and Consent agreement (AWC) that Aegis failed to maintain an adequate supervisory system to catch this type of misconduct. As a result, 31 firm customers allegedly suffered cumulative losses of $4.6 million and paid fees totaling more than $2.9 million.
The AWC further alleges that Aegis brokers failed to supervise the recommendations of risky non-traditional exchange-traded funds. Allegedly, 15 customers who purchased NT-ETFs lost $132,463.
As part of the terms of the AWC, Aegis consented to a fine of $1.05 million and a restitution payment of $1.69 million.
Alleged Failure to Execute Trades
On March 10, 2021, Aegis Capital consented to the findings that the firm failed to adhere to FINRA Rule 5310, which requires brokers to ascertain the best market for the purchase or sale of a security. This requirement is meant to ensure the best price for the customer. The AWC alleges these failures affected 26 corporate bond transactions.
As part of the terms of the Acceptance, Waiver, and Consent agreement (AWC), Aegis consented to a fine of $80,000 and a restitution payment of $43,912.89, plus interest.