Securities Arbitration Lawyer Blog
**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.
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Former Aegis Capital Broker Edmund Zack Suspended by FINRA – New York, NY
FINRA has suspended former Aegis Capital broker Edmund Zack from the securities industry for eight months for engaging in unsuitable and excessive trading, exercising discretion in customer accounts without written authorization, and causing Aegis to maintain inaccurate books and records. Zack was also fined $10,000 and consented to disgorgement of $5,161 in commissions.
He is no longer associated with a FINRA member but remains subject to FINRA’s jurisdiction.
If you have lost money with Edmund Zack, or Aegis Capital, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.
Our firm is currently investigating another former Aegis Capital broker, Kishan Parikh. You can read more about our firm’s investigation here.
A few weeks ago, Aegis Capital was fined $80,000 and censured by FINRA over multiple FINRA and MSRB Rules violations. The firm was also ordered to pay restitution of $43,912 to customers. 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.
FINRA Letter of Acceptance, Waiver, and Consent (“AWC”)
Edmund Zack and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on March 19, 2021, over the following findings:
- Between November 2014 and September 2015, Zack made unsuitable stock recommendations to and engaged in excessive and quantitatively unsuitable trading in the Aegis account held by one of his customers.
- In October 2017, Zack exercised discretionary trading authority to effect sales of securities in 27 customers’ accounts without having obtained prior written authorization from the customers or approval from Aegis to treat the accounts as discretionary.
- In doing so, Zack caused Aegis to maintain inaccurate books and records in violation of SEC rules. By causing Aegis to maintain inaccurate books and records, Zack himself violated FINRA Rules.
Unsuitable and Excessive Trading
Zack recommended that a customer actively trade in low-priced, speculative securities and use margin to increase his trading capacity.
The customer had an investment objective of “growth” and “moderate” risk tolerance, limited prior investment experience, and no experience with margin. Zack did not have a reasonable basis to believe these transactions were suitable for the customer.
The customer routinely followed Zack’s recommendations. As such, Zack exercised de facto control over his account.
Zack’s active trading generated an annualized cost-to-equity ratio of 122% and an annualized turnover rate of 22. The customer paid $10,424 in commissions and trading costs and incurred losses of $11,357.
FINRA found that Zack’s trading in the customer’s account was qualitatively unsuitable given the customer’s investment profile and limited investment experience. Further, FINRA found that Zack’s trading in the customer’s account was also excessive and quantitatively unsuitable.
Use of Discretion Without Prior Written Authorization
Unless a registered representative received prior written approval from both the customer and the firm, Aegis’s written supervisory procedures (WSPs) prohibited registered representatives from trading in a customer’s account on a discretionary basis.
The AWC indicates that, on a single day in October 2017, Zack exercised discretionary trading authority in the accounts of 27 Aegis customers when he sold shares of Social Reality, Inc. (SRAX). He executed the trades without obtaining prior written authorization from the customers and Aegis to exercise discretion in these customer accounts or discussing and receiving approval from each customer before selling the shares.
Inaccurate Books and Records
Aegis’s WSPs defined a trade as solicited if it was recommended to a customer and the customer placed an order as a result of that recommendation. When Zack solicited the customers’ purchase of SRAX shares, he also recommended the customers sell the shares when the stock reached a certain price. Zack initiated the sale of SRAX shares in his customers’ accounts based on his earlier recommendation but marked the trades as unsolicited, indicating that the customers initiated the sales.
By marking order tickets for these trades “unsolicited” rather than “solicited,” Zack caused Aegis to maintain inaccurate books and records. By causing Aegis to maintain inaccurate books and records, Zack himself violated FINRA Rules.
Edmund Zack (CRD#: 2215116)
Zack has 20 years of experience in the securities industry and has been registered with nine firms:
- Dawson James Securities, Inc., New York, NY (September 23, 2019 – December 20, 2019);
- Benchmark Investments, Inc., New York, NY (April 18, 2019 – September 20, 2019);
- Western International Securities, Inc., New York, NY (October 26, 2017 – April 15, 2019);
- Aegis Capital Corp., New York, NY (June 1, 2012 – November 17, 2017);
- National Securities Corporation, Huntington, NY (July 8, 2010 – June 4, 2012);
- J.H. Darbie & Co., Inc., New York, NY (February 15, 2007 – February 24, 2010);
- Carlin Equities Corp., New York, NY (March 19, 1997 – February 22, 2001);
- GKN Securities Corp., New York, NY (October 23, 1992 – May 27, 1997);
- First Montauk Securities Corp., Red Bank, NJ (October 1, 1992 – October 27, 1992); and
- GKN Securities Corp., New York, NY (September 14, 1992 – September 25, 1992).
How to Recover Losses or Obtain a Free Consultation
If you have lost money with Edmund Zack, or Aegis Capital, contact New York securities arbitration lawyer Jorge Altamirano of Iorio Altamirano LLP at jorge@ia-law.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.
See also:
Aegis Capital Fined and Censured by FINRA
Steven Robert Luftschein, Formerly with Aegis Capital Corp, Barred by FINRA
Iorio Altamirano LLP Files GPB Automotive Claim Against Aegis Capital Corp