Steven Robert Luftschein (also known as Steven Lerner), formerly an advisor with Aegis Capital Corp., has reportedly been barred from the securities industry by the Financial Industry Regulatory Authority (FINRA). This is on the back of allegations against him of excessive trading and churning in accounts of three different clients.
About Steven Luftschein
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From 2013 till December 2016, Luftschein was registered with Aegis Capital Corp at their office in Melville, NY. Thereafter, between 2017 and May 2018, his affiliation was with Joseph Stone Capital in Huntington, NY.
His BrokerCheck report reveals that he has 17 cases of customer complaints on his file, ranging from churning and excessive trading to unauthorized trades and unsuitable investments.
The data is damning.
As per FINRA, Luftschein “executed approximately 430 trades in the customers’ accounts — resulting in annualized turnover rates ranging from 12.5 to 96.3 and annualized cost-to-equity ratios (or break even points) ranging from 35.6% to 123.8%,”. This is for the period from July 2014 to June 2016.
The alleged excessive trading and churning engineered by Luftschein resulted in combined losses in excess of $261,000 in the accounts of the customers, as found by FINRA. Customers were making trading losses even while trading commissions of $136,200 were being generated as a result of the needless, excessive trading and churning, with Luftschein pocketing a substantial part thereof.
And that is not all. Unauthorised trades to the tune of $3.1 million were carried out in the accounts of the three customers, through a sequence of 88 executed trades.
For further information please refer FINRA case #No. 2016051704303.
What is Churning/ Excessive Trading
Trading in a customers’ account with the primary purpose of generating commissions for the broker, in disregard of the investment objectives of the customer, as well as his situation and needs, is referred to as churning or excessive trading. It is not only an unethical, but also an illegal practice.
It has often been found to have taken place in cases where the broker has discretionary authority over customer accounts and does not require specific approval for each transaction. These practices not only expose the customer to losses, but also have the potential of creating unnecessary tax liabilities.
Responsibility of the Brokerage Firm
While an individual rogue broker may carry out the illegal transactions, the brokerage firm with which the broker is registered is responsible too as they have the responsibility for compliance with FINRA regulations and are expected to be armed with a supervisory system that reigns in rogue brokers and transactions.
Failure to adequately supervise transactions being done by registered brokers makes the firm complicit in the transaction and liable for losses caused to the customer.
This information is provided by Haselkorn & Thibaut based on information available in the public domain.
Worried About Your Transactions with Luftschein or Aegis Capital?
What should you do if you have had dealings with Luftschein or Aegis Capital?
For starters, you should contact our securities attorneys for a free consultation on (800) 856-3352.
Haselkorn & Thibaut, P.A. is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Florida, NY, TX, NC and AZ.