FINRA fined Aegis Capital Corp. $950,000 and suspended Chief and AML Compliance Officers Charles D. Smulevitz and Kevin C. McKenna for improperly selling unregistered penny stocks and for failing to implement anti-money laundering (AML) policies and procedures. Aegis President and CEO Robert Eide also received his own $15,000 fine and suspension for failing to disclose $640,000 in outstanding liens.
According to FINRA's report, Aegis liquidated approximately 3.9 billion shares of five different penny stocks that were not registered with the SEC nor exempt from registration requirements. The investigation states Aegis' transactions of these penny stocks produced a handful of red flags, but that the firm failed to appropriately respond to them.
Regulators found that these violations and oversights resulted, at least in part, from Smulevitz and McKenna's supervisory failures pursuant to their positions as compliance officers: The investigation states that Aegis did not have adequate supervisory systems in place and on multiple occasions failed to conduct reasonable and meaningful inquiries into penny stock sales.
FINRA reached a similar conclusion pertaining to AML violations, noting that suspicious transactions and other red flags went uninvestigated while deposits of unregistered securities, followed shortly by liquidations, similarly were not investigated.
Enforcement, therefore, concluded that Aegis's system to detect, investigate and/or report suspicious activity was inadequate.
If you have invested with Aegis Capital Corp. or with any broker or financial adviser whose improper sales of unregistered penny stocks or other suspicious or noncompliant securities have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.
News Release: FINRA Fines Aegis Capital Corp. $950,000 for Sales of Unregistered Penny Stocks and AML Violations (FINRA)