Aegis Capital Accused of Facilitating Alleged $24.5 Million Pump-and-Dump Schemes

Rochester stockbroker fraud attorneyFINRA accused independent broker-dealer Aegis Capital, of New York City, of failing to supervise its anti-money laundering requirements, and orchestrating an alleged unregistered penny stock scheme which raked in $1.1 million in commissions for the firm.

Aegis Capital Liquidated Almost 3.9 Billion Shares of Five Penny Stocks

Between April 2009 and June 2011 Aegis Capital sold off billions of shares of microcap, or penny stocks, which seven customers had deposited into accounts at the firm. These shares were not registered with the SEC, nor were the transactions immune from registration, FINRA alleges. From these illicit sales, the customers generated over $24.5 million in profits, which subsequently led to $1.1 million in commissions.

Suspicious Investor “ML” Followed Pattern

A suspicious investor, “ML”, an unnamed investor who had a history of regulatory issues and was under a five-year ban by the SEC from participating in penny stock offerings, referred each of the seven customers to Aegis while also controlling the activity of several of the accounts, FINRA reports. The activity in the seven ML-affiliated accounts used a similar formula. The customers generally acquired shares of the five microcap stocks, and a third party acquired a debt instrument from the issuer. The third party would keep the instrument for a period of time. The customers then acquired the debt instrument from the third party, and negotiated with the issuer to make the debt instrument transferable to stock, and the shares of the penny stocks were then deposited into their accounts at Aegis, a FINRA complaint alleges. The firm then liquidated the shares shortly after depositing them, and wired the profits out of their accounts shortly after the sales. “ML” is not alleged to have ever been a client of Aegis. In a2008 civil case in federal court, the SEC charged ML with multiple offenses, including aiding and abetting securities fraud and participating in a scheme to evade the registration requirements.

Investment Fraud Lawyers Investigating Aegis

The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting victims with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1160 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.