Scott Neil Hananel of Melville, New York, a stockbroker formerly registered with Aegis Capital Corp, has been fined $7,500.00 and suspended for 15 months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Hananel engaged in unsuitable and excessive trading when he was associated with Aegis Capital Corp. Letter of Acceptance, Waiver, and Consent No. 2021070337101 (March 29, 2022).
According to the AWC, between January of 2015 and September of 2017, Hananel had discretionary authority over customers’ accounts. The regulator notes that Hananel determined the frequency and volume of trades made in accounts of Customer A to Customer F. Hananel used discretion to make 571 trades across those customers’ accounts.
The regulator found that between July of 2014 and December of 2018, Hananel’s short-term trades were not appropriate and were made excessively, as the customers experienced high markups, markdowns, and commissions, and they experienced substantial losses.
FINRA states that Customers A and B invested through Hananel while he was registered with Aegis Capital Corp. Between July of 2014 and December of 2018, Hananel caused the customers’ account to have an annualized turnover rate of 21.98 and annualized cost-to-equity ratio of 55.61. The stockbroker caused customers to experience $109,084.00 in trading costs and commissions. The customers incurred $44,641.00 in losses.
The AWC states that between July of 2014 and February of 2017, Hananel caused Customer C’s account to have an annualized turnover rate of 21.92 and an annualized cost-to-equity ratio of 28.91. This produced $110,066.00 in trading costs and commissions. Customer C experienced $332,002.00 in losses.
FINRA indicates that Customer D, who was an elderly investor, experienced $600,198.00 in trading costs and commissions as a result of Hananel’s trading, as Hananel caused the customer’s account to incur a 22.41 annualized turnover rate and a 32.99 annualized cost-to-equity ratio. Hananel’s trading in that customer’s account between July of 2014 and December of 2018 resulted in $893,673.00 in losses.
Customers E and F invested through Hananel between July of 2014 and December of 2018. Their account sustained an annualized turnover rate of 16.86 and annualized cost-to-equity ratio of 26.57. Hananel caused the customers to experience trading costs and commissions totaling $653,770.00 and losses totaling $832,860.00.
Hananel violated FINRA Rules 2010 and 2111 by making unsuitable recommendations to Customers A to F.
The regulator notes that Hananel also effected unauthorized trades at Aegis Capital Corp. From January of 2015 to September of 2017, Hananel was not allowed to effect discretionary trades without written authorization from both the customer and the securities broker dealer. Hananel used discretion to trade in customers’ accounts between January of 2015 and September of 2017. Customers did not know about the specific trades that would be made by Hananel. They also did not know about the dates when the trades would be placed. The regulator states that Hananel did not have written discretionary trading authorizations from Aegis Capital Corp or the affected customers. He violated FINRA Rule 2010 and National Association of Securities Dealers (NASD) Rule 2510(b) for this reason.
FINRA Public Disclosure shows that Hananel has been identified in seven customer initiated investment related disputes regarding accusations of his conduct while employed by securities broker dealers, including Aegis Capital Corp. On December 7, 2020, a customer filed an investment related FINRA securities arbitration claim regarding Hananel’s activities in which the customer sought between $50,000.00 and $100,000.00 in damages founded on allegations of unauthorized trading between August of 2019 and August of 2020 during the time that Hananel was associated with Aegis Capital Corp. FINRA Arbitration No. 20-03965 (December 7, 2020). According to the claim, the customer’s account had been churned.
Hananel is also referenced in a customer initiated investment related FINRA securities arbitration claim where the customer requested compensatory damages supported by accusations of unsuitable recommendations by Hananel concerning stock trades at Aegis Capital Corp. FINRA Arbitration No. 21-00235 (January 29, 2021). The claim alleges breach of fiduciary duty and breach of contract by Hananel.
On February 3, 2021, another customer filed an investment related FINRA securities arbitration claim concerning Hananel’s conduct in which the customer sought compensatory damages based upon allegations of unsuitable investment recommendations for the customer’s Aegis Capital Corp account.
Hananel was registered with Aegis Capital Corp between February 19, 2010, and February 2, 2021.