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