FINRA has named Aegis Capital Corp., Charles D. Smulevitz (CRD# 5099387), and Kevin C. McKenna (CRD# 1343870) in a complaint concerning a microcap stock scheme. FINRA filed disciplinary proceedings against Aegis Capital Corp., Charles D. Smulevitz, and Kevin C. McKenna in August 2014. The respondents submitted an offer of settlement in July 2015, which FINRA recently accepted.
FINRA's complaint against Smulevitz and McKenna concerns alleged misconduct while the two were registered with Aegis as Chief Compliance Officer.
According to FINRA’s findings, the misconduct took place between April 2009 and June 2011 when Aegis generated more than $1 million in commissions through illicit sales. FINRA accused Aegis of selling shares that were not registered with the SEC even though registration was required.
FINRA says that a third party, ML, who was not affiliated with Aegis, referred customers to Aegis and controlled activity in many customers’ Aegis accounts. It is important to note that, at the time, ML had already been the subject of three regulatory actions – two of which are relevant to the conduct set forth in this complaint.
Back in 2008, ML had been charged by the SEC with aiding and abetting securities fraud. This is the same type of misconduct that allegedly took place in this case. In 2009, the SEC banned ML from participating in penny stock offerings. A month later, ML was barred completely from the securities industry.
Allegedly, the microcap stock sales in this case were part of a larger plan to evade the SEC’s registration requirements. The SEC accuses Aegis, Smulevitz, and McKenna of failure to establish, enforce, and maintain an adequate supervisory system at the firm to prevent non-compliance with Section 5 registration requirements.If you invested with Aegis Capital Corp. between April 2009 and June 2011 and you lost a substantial amount of money, we invite you to contact the securities fraud lawyers at Meyer Wilson to tell us what happened. We will provide you with a free review of your case to inform you of your legal rights and options.