The Financial Industry Regulatory Authority (FINRA) recently barred former Aegis Capital Corp.(Aegis) broker Malcom Segal (Segal) alleging that Segal may have engaged in unauthorized transfers of funds from customer accounts to an outside business activity (a/k/a “selling away“).
Segal was a broker for Aegis from 2011 until July 2014 when he was terminated by Aegis for failing to cooperate with an internal investigation into a customer complaint alleging he made unauthorized wire transfers from a customer’s account. Segal operated from Boynton Beach, Florida and Langhorne, Pennsylvania.
Aegis appears to be distancing itself from Mr. Segal by alleging he was not operating with Aegis’ permission. Frequently referred to as selling away, firms may still be liable for a broker’s actions because it has a duty to properly monitor and supervise its employees.
Under the FINRA rules, a brokerage firm owes a duty to properly monitor and supervise its employees. In order to properly supervise their brokers each firm is required to establish and maintain a system to supervise the activities of each registered representative to achieve compliance with the securities laws. Selling away often occurs in environments where the brokerage firm either fails to put in a place a reasonable supervisory system or fails to actually implement that system and meet supervisory requirements.
Investors who have suffered losses through outside business activities may be able to recover their losses through arbitration. The attorneys at Silver Law Group are experienced in representing investors in cases of selling away, Ponzi schemes, and brokerage firms’ failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.