Douglas Edward Szempruch of Melville New York a stockbroker formerly registered with Aegis Capital Corp has been suspended for twelve months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity founded on findings that he excessively traded in customer accounts at Aegis Capital Corp and made misleading statements to customers relating to their investments. Letter of Acceptance Waiver and Consent No. 2017054317401 (July 9, 2021).
According to the AWC, Szempruch effected excessive trades in six Aegis customers’ accounts. The customers maintained moderate risk tolerances and had objectives of growth or balanced growth. They relied upon Szempruch’s recommendations and followed them closely. FINRA indicated that their accounts were controlled by the stockbroker for this reason.
Szempruch caused one customer’s account to have an annualized cost-to-equity ratio of 109.14 percent and an annualized turnover rate of 25.51. This led the customer to incur $9,966.00 in losses while having to pay $9,517.00 in commissions.
The stockbroker caused a different customer’s account to have an annualized cost-to-equity ratio of 41.4 percent and an annualized turnover rate of 9.73. This resulted in $32,103.00 in losses for the customer while generating $22,572.00 in commissions.
Szempruch’s trading in the six customers’ accounts was excessive and unsuitable according to FINRA. He violated FINRA Rules 2010 and 2111 for this reason.
FINRA also relayed that from August of 2014 to October of 2016, 578 trades were executed by Szempruch on a discretionary basis in seven customers’ accounts. The stockbroker did not receive written authorization to trade in their accounts by using discretion. There was no point in which Aegis Capital Corp accepted those accounts as discretionary or allowed Szempruch to place trades in customer accounts without pre-trade confirmations. The regulator noted that six of those accounts were also excessively traded by the stockbroker. Szempruch violated FINRA Rule 2010 and National Association of Securities Dealers (NASD) Rule 2510(b).
The AWC also confirms that Szempruch made misleading statements to investors. According to the regulator, Szempruch provided 34 customers with misinformation about a company. The stockbroker relayed to customers that he met with the company and directly communicated with its management. FINRA indicated that Szempruch inaccurately described his knowledge of the company’s information and his involvement with its management, violating FINRA Rules 2010 and 2210(d)(1)(B).
Szempruch has been identified in customer initiated investment related disputes concerning accusations of his misbehavior while he was employed by securities broker dealers including SW Bach Company and Aegis Capital Corp. FINRA Public Disclosure reveals that a customer filed an investment related complaint involving Szempruch’s conduct in which the customer sought compensatory damages supported by allegations that unauthorized trades were effected in their account at SW Bach Company.
On March 29, 2018, another customer initiated investment related complaint concerning Szempruch’s conduct was resolved for $30,000.00 in damages based upon accusations that Szempruch provided unsuitable recommendations to the customer as it pertained to stock trades executed in the customer’s account at Aegis Capital Corp.
Szempruch was registered with Aegis Capital Corp between June 27, 2011 and June 11, 2021.
