Douglas Szempruch Faces Suspension Following Allegations of Excessive Trading
Douglas Szempruch (CRD #: 4159318), a broker previously registered with Aegis Capital Corp, has consented to a one-year suspension and a restitution fine of $99,720.87 following allegations of excessive trading. This is according to his BrokerCheck record, accessed on July 14, 2021.
Douglas Szempruch Consented to Findings that he Misled Investors
On July 9, 2021, Szempruch entered into an Acceptance, Waiver, and Consent (AWC) agreement in which he consented to the findings that he executed excessive trades in six investor accounts.
FINRA further alleged the following:
- Szempruch exercised discretionary trading authority in investor accounts without prior written authorization.
- He allegedly sent emails containing misleading statements about an investment opportunity from his Aegis email account.
What is Excessive Trading?
FINRA has a calculation to determine excessive trades, which generate too many fees to provide any financial benefit for the investor. To determine if excessive trading has occurred, FINRA calculates the cost-to-equity ratio. Cost-to-equity ratios of over 20% generally indicate excessive trading.
In one investor’s case, their portfolio had a cost-to-equity ratio of 34.3%. As a result, the investor paid $37,602 in commissions and suffered $75,243 in losses over two years.
The six customers collectively lost $157,605 and paid $127,198 in commissions.
Misleading Emails
According to the AWC, between May 2017 and June 2017, Szempruch sent misleading emails regarding Company A, in which he inaccurately represented that he:
- Visited Company A’s production facility
- Directly communicated with Company A’s management
- Had first-hand information about Company A
While Szempruch was invited to visit the facility, FINRA alleges he never did.
Terms of the AWC
As part of the terms of the AWC, Douglas Szempruch consented to a 12-month suspension and a restitution payment of $99,720.87, plus interest.
You can read a copy of the AWC here.
Investor Dispute
On February 28, 2018, an investor alleged that Douglas Szempruch recommended unsuitable investments. His investor’s portfolio allegedly suffered from poor performance. The dispute settled for $30,000.
Criminal Charge
On September 18, 2005, Douglas Szempruch was charged with one count of bribery as well as one count of criminal possession of stolen property. He pled guilty to a reduced charge of attempting to obstruct government administration, which is a Class B misdemeanor.
Douglas Szempruch Background Information
Szempruch has passed the following exams:
- Series 63 Uniform Securities Agent State Law Examination
- Securities Industry Essentials Examination
- Series 7 General Securities Representative Examination
Douglas Szempruch has worked for the following firms:
- Aegis Capital Corp (CRD #: 15007)
- Global Arena Capital Corp (CRD #: 16871)
- Prestige Financial Center (CRD #: 30407)
- W. Bach & Company (CRD #: 43522)
- Harrison Securities (CRD #: 14103)
- Weatherly Securities Corporation (CRD #: 11081)
Kurta Law Can Help
If you worked with Douglas Szempruch and you have concerns about excessive trading, contact Kurta Law today. Call 212-658-1502 or email jkurta@kurtalawfirm.com.