INVESTOR ALERT: FINRA Bars JAMES SCHWARTZ For Excessive Trading

The Financial Industry Regulatory Authority (“FINRA”) announced it barred Aegis Capital Corp securities representative James Bradley Schwartz (CRD#: 3043085, New York City, New York) for making fraudulent trades and churning Aegis Capital Corp customers’ accounts. A settlement was reached April 16, 2019 in Case #2016051704302, following FINRA’s February 26, 2019 Complaint alleging Schwartz violated FINRA and SEC Rules. See a summary of FINRA’s findings below:

Schwartz joined Aegis Capital Corp on June 6, 2013. Not long after, in August 2014, Schwartz started churning and making excessive trades in the accounts of Aegis customers. Allegedly, Schwartz engaged in unlawful trading from August 2014 to May 2016, making 535 trades in four customers’ accounts.

James Schwartz Makes $194,000 While Causing Customers $600,000 In Losses

FINRA stated that Schwartz’s frequent trading led to high turnover rates and cost-to-equity ratios. Specifically, one or more customers had turnover rates as high as 54.7, and cost-to-equity ratios of 120%. Those numbers demonstrated to FINRA that Schwartz churned the customers’ accounts. The findings also show that Schwartz made unsuitable trades. FINRA stated that eventually, Schwartz’s trading caused customers to lose $600,000. Despite the customers incurring serious losses, Schwartz made $194,000, according to FINRA. Indeed, the firm drew in $277,705 from the customers through sales credits and commissions.

Not only that, but FINRA says that Schwartz made unauthorized trades in those same customers’ accounts. Specifically, Schwartz made 261 trades involving about $10,000,000 in principal value. Evidently, customers did not agree to Schwartz’s trades. Supposedly, Schwartz also traded in the account of a deceased customer while having no authority.

The Order Accepting Offer of Settlement contains findings of Schwartz violating Section 10(b) of the Exchange Act, while also violating Rule 10b-5 and FINRA Rules 2111, 2020 and 2010.

Customers of both Aegis Capital Corp and Paulson Investment Company recently filed complaints about Schwartz. For example, take a look at these disputes brought by Aegis customers:

Aegis Customer Brings Arbitration Involving Schwartz, Alleges Misrepresentation, Negligence

 

A customer of Aegis Capital Corp brought FINRA Arbitration #18-03717 concerning Schwartz’s sales practices from 2013 to 2016. First, the customer claimed in the October 29, 2018 Arbitration that Schwartz or the firm made irresponsible, negligent decisions with the customer’s assets. Allegedly, Schwartz made unsuitable trades involving warrants – products which give the holder the right to buy a security at a set price. Supposedly, Schwartz or the firm failed to comply with their fiduciary duties and agreements under contract. Not only that, but the customer claimed Schwartz misrepresented the investments. Because of this, the customer demanded $32,871.30.

May 11, 2018 Arbitration Involving James Schwartz’s Unauthorized Trading, Churning Of Accounts

 

An Aegis Capital Corp customer contested Schwartz’s sales practices in filing FINRA Arbitration #18-01797 on May 11, 2018. Primarily, the customer claimed that Schwartz churned the customer’s account. Additionally, the customer indicated that Schwartz made trades with no authorization from the customer. These trades supposedly involved bad investments which caused the customer unreasonable losses. Additionally, the customer brought claims of breach of fiduciary duty, breach of contract and negligence. Eventually, Aegis Capital Corp settled the customer’s claim on January 22, 2019 by agreeing to pay the customer $132,500.

February 12, 2018 Arbitration Involving Schwartz’s Unauthorized, Unsuitable Trades

 

Aegis Capital Corp reported that FINRA Arbitration #18-00408 involved references to Schwartz’s trading practices. The Aegis customer first contended that Schwartz made unauthorized trades. Secondly, the customer indicated that Schwartz’s investment advice was not reasonable or fitting to the customer’s situation. Because of the alleged unauthorized and unsuitable trades causing losses, the customer demanded $1,694,099 in compensation. However, this dispute is unresolved.

Lars Soreide Highest Ethical Standard Award 2018

Lars Soreide Highest Ethical Standard Award 2018

Besides Aegis Capital Corp, Schwartz worked at First Standard Financial Company LLC (2016) and Joseph Gunnar & Co. LLC (2016 to 2017). Have you experienced losses by investing with James Schwartz? If so, contact Soreide Law Group at (888) 760-6552 and speak with experienced counsel about a possible recovery of your investment losses. Soreide Law Group represents clients on a contingency fee basis and advances all costs. The firm has recovered millions of dollars for investors who have suffered losses due to misconduct of brokers and brokerage firms.