Edmund Roger Zack of New York New York a stockbroker formerly registered with Aegis Capital Corp has been fined $10,000.00 and suspended for eight months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity supported by findings that Zack made unsuitable recommendations to Aegis customers and made excessive trades in their accounts. Letter of Acceptance Waiver and Consent No. 2020068439201 (Mar. 19, 2021).
According to the AWC, between November of 2014 and September of 2015, an Aegis customer had been advised by Zack to trade low-priced securities. That customer was also told to use margin so that they could increase their trading power. Zack neglected to have an adequate basis to conclude that the transactions were appropriate for the customer. FINRA revealed that the customer had zero margin experience, limited experience with investing, a moderate risk tolerance, and a goal of growth.
The AWC stated that the customer had subscribed to the recommendations made by Zack on a routine basis. This permitted the stockbroker to control the customer’s account and trade in an aggressive manner.
FINRA confirmed that the customer’s account had an annual turnover rate of 22 and a cost-to-equity ratio of 122 percent which indicated that Zack engaged in excessive trading. Zack took in $10,424.00 in trading costs and commissions all while the customer sustained $11,357.00 in losses. FINRA determined that Zack’s trading in the Aegis customer’s account violated FINRA Rules 2010 and 2111.
The AWC also revealed that Zack traded in customer accounts without getting authorization from them. In October of 2017, customers’ shares of Social Realty Inc. (SRAX) had been sold by Zack without him getting written authorization from customers to engage in discretionary trading. Zack took no steps to speak with customers regarding the specific transactions, and he never received pre-trade approval from customers. FINRA determined that Zack’s exercise of discretion in the accounts of 27 customers constituted the violation of FINRA Rules 2010 and National Association of Securities Dealers (NASD) Rule 2510(b).
The stockbroker also mismarked customer order tickets. The regulator indicated that customers were advised by Zack to sell their SRAX shares. Zack marked those transactions as unsolicited when they were solicited by him. He violated FINRA Rules 2010 and 4511 in this respect.
Zack’s registration with Aegis Capital Corp has been terminated as of November 17, 2017. He was registered with Western International Securities Inc. between October 26, 2017 and April 15, 2019. He also maintained stockbroker registrations at Benchmark Investments Inc. and Dawson James Securities Inc. in 2019