Sign of the Financial Industry Regulatory Authority

Steven Robert Luftschein (also known as Steven Lerner) a stockbroker formerly employed by Aegis Capital Corp has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that (1) Luftschein churned the accounts of Aegis Capital Corp customers and that (2) Luftschein defrauded investors. Department of Enforcement v. Steven R. Luftschein Disciplinary Action No. 2016051704303 (May 13, 2020).

According to the Complaint, between July of 2014 and June of 2016, during the period in which Luftschein was employed by Aegis Capital Corp, he churned and executed excessive transactions in at least three customers’ accounts. The Complaint alleged that 430 transactions had been executed in the customers’ accounts by the stockbroker which caused those accounts to contain annual cost-to-equity ratios ranging between 35.6 percent and 123.8 percent. The customers’ accounts allegedly contained turnover rates which ranged between 12.5 and 96.3.

FINRA contended that Luftschein’s trading failed to be suitable and had resulted in at least $261,000.00 in losses in affected customers’ accounts. The regulator indicated that the securities broker dealer took in an estimated $136,200.00 in commissions and sales credits during this timeframe with most of those monies being directed to the stockbroker. FINRA Department of Enforcement contended that Luftschein’s actions were violative of FINRA Rules 2010, 2020 and 2111 as well as Securities Exchange Act of 1934 Section 10(b) and Securities and Exchange Commission (SEC) Rule 10b-5.

According to the Complaint, eighty-eight trades had also been effected in customers’ accounts without Luftschein having proper authorization. Those trades apparently contained a principal value of $3,100,000.00. FINRA Department of Enforcement alleged that Luftschein’s conduct was violative of FINRA Rules 2010.

FINRA Public Disclosure confirms that Luftschein has been identified in seventeen customer initiated investment related disputes concerning accusations of his misconduct while employed by securities broker dealers including Aegis Capital Corp and Paulson Investment Company. On April 30, 2018, a customer initiated investment related arbitration claim concerning Luftschein’s activities was resolved for $800,000.00 in damages founded on accusations of a fiduciary duty being breached by Luftschein and accusations of his recommendations failing to be suitable for the customer. FINRA Arbitration No. 17-01932. According to the claim, federal and state securities laws were violated by the stockbroker. The claim also alleges that exchange traded funds and over-the-counter equities transactions were negligently supervised by Paulson Investment Company.

On May 30, 2019, another customer initiated investment related arbitration claim pertaining to Luftschein’s conduct was settled for $569,962.38 in damages supported by allegations that bad investment recommendations had been made by Luftschein and that the securities transactions had been facilitated in the customer’s Aegis Capital Corp account without authorization. FINRA Arbitration No. 18-00408. Luftschein is also the subject of a customer initiated investment related arbitration claim which was resolved for $132,500.00 in damages based upon accusations of a breach of fiduciary duty and a breach of contract regarding the trades Luftschein effected during the time that he was associated with Aegis Capital Corp. FINRA Arbitration No. 18-01797 (Jan. 22, 2019). According to the claim, the customer’s account was churned and subject of unauthorized trades. The claim also alleges negligence and suitability.

On December 6, 2019, a customer filed an investment related arbitration claim involving Luftschein’s conduct in which the customer requested $200,000.00 in damages based upon allegations that misleading and false statements had been made to the Aegis Capital Corp customer about securities. FINRA Arbitration No. 19-03414. The claim also alleges that trades were effected on an unsuitable and unauthorized basis by Luftschein.

Luftschein’s employment with Aegis Capital Corp was terminated on October 21, 2016. Between May 16, 2017 and May 21, 2018, he was employed by Joseph Stone Capital LLC.