Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Alan Appelbaum (Appelbaum), previously associated with Aegis Capital Corp., has at least 3 disclosable events. These events include one customer complaint, 2 regulatory events, alleging that Appelbaum recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on December 07, 2023.
The Securities and Exchange Commission (‘Commission’) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted Alan Z. Appelbaum (‘Respondent’). In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (the ‘Offer’) which the Commission has determined to accept. The Commission finds that on November 14, 2023, a final judgment was entered, by consent, against Appelbaum, providing permanent injunctive relief under Section 17(a) of the Securities Act of 1933 (‘Securities Act’) and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, in the civil action entitled Securities and Exchange Commission v. Alan Z. Appelbaum, in the United States District Court for the Southern District of Florida. The Commission’s complaint filed in the above-referenced civil action alleged that, from July 2017 through May 2019, Appelbaum disregarded his obligations to seven customers and violated the antifraud provisions of the federal securities laws by making unsuitable investment recommendations. The complaint further alleged that Appelbaum engaged in unauthorized trading, also in violation of the antifraud provisions of the federal securities laws.
FINRA BrokerCheck shows a final customer complaint on September 23, 2022.
Without admitting or denying the findings, Appelbaum consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its examination into his sales of complex structured products.
FINRA BrokerCheck shows a settled customer complaint with a damage request of $550,000.00 on May 19, 2021.
CLAIMANT ALLEGES UNSUITABLE INVESTMENTS
Financial Advisors providing advice to retail investors are required to adhere to the SEC’s Regulation Best Interest (Reg BI). Reg BI applies a ‘best interest’ standard for broker-dealers and their associated people. Reg BI applies when brokers recommend a retail investor engage in securities transaction or an investment strategy involving one or more securities. Reg BI also applies to financial advice concerning the transfer of funds and opening of accounts. This standard applies when a registered representative is providing investment advice through making recommendations customers and covers securities transaction, investment strategies, and recommendations concerning advice on opening of an account or accounts.
Another aspect of the care obligation is focusing on the client’s specific needs which brokers must reasonably understand through obtaining information for the client’s investment profile. In completing a customer’s investment profile the advisor should include information such as the investor’s investment time horizon; liquidity needs; risk tolerance; experience with various investment vehicles; investment objectives and financial goals; assets and debts including outside investment accounts; marital status; tax information; age; and other relevant information that may be individual to the investor that the advisor would need to know to properly render advice or provide services. Reg BI is drawn from fiduciary principles that include an obligation to act in the retail investor’s best interest and the broker is prohibited from placing their own interests ahead of the investor’s interest. Reg BI comes with different key obligations that associated persons must meet in dispensing advice. The care obligation requires registered representatives to carefully evaluate investment options, review the risks and rewards of the investment or service, compare similar products, and ensure that the recommended investment is appropriate for the customer and in the retail investor’s best interest.
The care obligation also requires the broker to address the client’s specific needs through obtaining specific investment profile information on the client. The associated person typically will ask the customer for information such as the investor’s risk tolerance or ability to withstand account value declines or increases; experience with investments available; investment objectives and goals; investment time horizon; liquidity needs; assets such as investment accounts held at other financial institutions; tax information; their age and retirement plans; and other information that a customer may want to provide to the advisor to help them to properly address the services needed. Finally, the advisor must use their knowledge of the first two elements to consider reasonably available investment option alternatives and come to the conclusion that there is a reasonable basis to believe that the recommendation or advice being provided is in the retail investor’s best interest. In addition to specific investments being recommended, under Reg BI, a broker must also understand the type of account that their client would need in order to meet their care obligations. The SEC has stated that the type of securities account an investor has can greatly affect a customers’ costs and overall investment returns. Further, different account types can offer and support different features, products, securities, or services, and account type would not be appropriately applied in a one size fits all manner.
Appelbaum has been in the securities industry for more than 45 years. Appelbaum has been registered as a Broker with Aegis Capital Corp. since 2015.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.