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SEC Obtains Final Judgment from Federal Court in Florida Against Former Registered Representative Charged With Unsuitable Investments and Unauthorized Trading

On November 17th, 2023, the Securities and Exchange Commission (SEC) announced that a final judgment has been obtained against Alan Z. Appelbaum (CRD#: 500336). Mr. Appelbaum—who was most recently associated with Aegis Capital Corp in Boca Raton, Florida—was charged with making unsuitable investment recommendations and engaged in unauthorized trading. Here, our Miami unsuitable investments law firm for investors highlights the key things to know about this case and the SEC’s final judgment.

SEC Final Judgment: Alan Z. Appelbaum Formerly of Aegis Capital Corp 

In a case filed in the United States District Court for the Southern District of Florida, the SEC secured a final judgment against Alan Z. Appelbaum—a former Aegis Capital Corporation representative. Mr. Appelbaum was charged with unsuitable investment recommendations and unauthorized trading.

More specifically, the SEC’s complaint accused Appelbaum of recommending “steepeners” to several retail customers with moderate risk tolerance, which was inconsistent with their investment profiles. He also allegedly made false statements to prevent account closures.

Without admitting or denying the allegations, Mr. Appelbaum consented to the judgment, which includes permanent injunctive relief, a $50,000 penalty, $47,500 in disgorgement, and an additional payment for pre-judgment interest.

Note: In September of 2022, Alan Z. Appelbaum was barred from the securities industry by FINRA for his failure to cooperate with a regulatory investigation into this matter.

What are Steepeners? 

“Steepeners” are complex financial instruments tied to the difference, or spread, between short-term and long-term interest rates. They are typically structured products that increase in value when the spread between these rates widens, a condition known as a steepening yield curve. Conversely, they lose value when the spread narrows or flattens.

These products are often attractive to investors seeking higher yields, but they carry significant risks, especially for those with moderate risk profiles. That being said, complexity and dependence on interest rate movements make them unsuitable for investors who are unwilling or unable to tolerate substantial losses or long investment horizons.

FINRA Requires Brokers to Make Suitable Investment Recommendations 

FINRAmandates that brokers make suitable investment recommendations, tailored to their clients’ individual financial situations, goals, and risk tolerances. The suitability obligation ensures that brokers thoroughly understand both the products they recommend and their clients’ profiles. Brokers must consider factors like the client’s age, financial experience, time horizon, liquidity needs, and risk appetite before advising on any investment. It is a professional requirement that is crucial to help safeguard investors from unsuitable and potentially harmful financial decisions. A broker in Florida can be held liable for damages caused by unsuitable investment guidance.

Contact Our Miami, FL Unsuitable Investments Lawyer Today

At ​Carlson & Associates, P.A., we always put the needs of individual investors first. Brokers and brokerage firms that make unsuitable investment recommendations must be held accountable. For a confidential, no obligation initial review of your case, please feel free to contact us today.



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