Arkady Ginsburg (CRD:#5256747) is a registered broker who is currently employed with Aegis Capital Corp. (CRD#:15007) of New York, NY. He was previously employed with Rockwell Securities LLC (CRD#:142483) of New York, NY, and S.W. Bach & Company (CRD#:43522) of Port Washington, NY. He has been in the industry since 2006.
Scott Hananel (CRD:#3080827) is a previously registered broker last employed with Aegis Capital Corp. (CRD#:15007) of Melville, NY, Gunnallen Financial, Inc (CRD#:17609) of Farmingdale, NY, and Milestone Group Management LLC (CRD#:44486) of Lake Success, NY. He has been in the industry since 1998.
Both brokers worked for Aegis and suspended by FINRA for similar allegations.
Ginsburg has only one customer dispute, filed on 2/12/2018. The customer alleged “unauthorized trading and unsuitable investment recommendations.” The client requested damages of $32,398.00, and the firm settled the claim for $12,635.22.
Following the customer dispute, FINRA initiated an investigation based on FINRA’s 2016 cycle examination and a call made to FINRA Securities Helpline for Seniors. One of the customers involved in the investigation is a senior investor. (A two-page PDF from FINRA’s Senior Helpline is available for download here.)
From August 2014 through December 2015 and from March 2018 through June 2020, Ginsburg engaged in “excessive and unsuitable trading” in three customer accounts. All three customers trusted Ginsburg’s recommendations, and generally took his advice, giving Ginsburg de facto control over all three customer accounts. As a result, Ginsburg made commissions of $113,591 from these accounts.
Ginsburg signed the Acceptance, Waiver & Consent (AWC) letter on 3/22/2022. In it, FINRA imposed sanctions of:
- A six-month suspension from any association with any FINRA member in any capacity from 4/18/2022 through 10/17/2022.
- Partial restitution to the customers in the amount of $113,591.
No fines were imposed due to his stated limited ability to pay.
Like Ginsburg, the investigation into Hananel’s business practices originated from a FINRA cycle examination of Aegis. Similarly, Hananel engaged in excessive and unsuitable trading in six Aegis customer accounts from July 2014 and December 2018. From January 2015 and September 2017 Hananel also exercised discretionary authority to make 571 trades in those six customer accounts without prior written authorization from the clients. All but two of these clients were senior citizens.
What Is Churning
According to FINRA, no single test defines excessive activity, but factors such as the turnover rate and the cost-to-equity ratio may provide a basis for finding a violation of FINRA’s suitability rule. The turnover rate represents the number of times in one year that a portfolio of securities is exchanged for another portfolio of securities. The cost-to-equity ratio measures the amount by which an account must appreciate annually to cover commissions and other expenses so that a customer may begin to see a return. In other words, it is the break-even point where a customer may begin to see a return. A turnover rate of six or a cost-to-equity ratio above 20 percent generally indicates that excessive trading has occurred.
Did You Invest With Arkady Ginsburg or Scott Neil Hananel?
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