Steven Luftschein (Steven Robert Luftschein CRD# 2690117) was recently barred from acting as a broker by the Financial Industry Regulatory Authority (FINRA) following an investigation into allegations that Luftschein violated federal securities laws. Luftschein, who operated in the greater New York area, was registered with Aegis Capital Corp. from 2013-2016, and then with Joseph Stone Capital LLC for the years 2017-2018.
FINRA Filed A Disciplinary Complaint In May 2020
In May 2020, the FINRA Department of Enforcement filed a Complaint against Luftschein alleging that “while associated with Aegis Capital Corp. . . . [Luftschein] churned and excessively traded the accounts of three of his Firm customers . . .”. Specifically, FINRA alleged:
- Luftschein frequently engaged in unauthorized trading by making purchases and sales of securities without first discussing the transactions with Customers and obtaining their authorization;
- Luftschein’s churning and excessive trading was unsuitable and caused losses of more than $261,000 in the Customers’ accounts; and
- Luftschein’s trading in the Customers’ accounts generated gross sales credits and commissions of approximately $136,200, with Luftschein receiving a substantial percentage of this amount.
For allegedly engaging in this misconduct, FINRA brought causes of action for (1) Churning in violation of Section 10(b) of the Securities Exchange Act, Rule 10b-5, and FINRA Rules 2020 and 2010, (2) Excessive Trading/Quantitative Unsuitability in violation of FINRA Rules 2111 and 2010, and (3) Unauthorized Trading in violation of FINRA Rule 2010.
In January 2021, Luftschein ultimately accepted an offer of settlement wherein he agreed to a bar from association with any FINRA member firm in any capacity.
Steven Luftschein Has One Pending And Thirteen Settled Customer Disputes Disclosed On His FINRA Record
According to Luftschein’s CRD Report, Luftschein is the subject of one pending customer dispute in which the customer alleges “excessive and unsuitable trading” and “false and misleading statements” leading to alleged damages of $200,000. While this complaint is ongoing, Luftschein’s CRD Report also discloses thirteen settled complaints including, but not limited to, the following:
- In January 2019, Aegis Capital settled a customer complaint alleging “negligence, unauthorized trading, churning, unsuitability, breach of contract, [and] breach of fiduciary duty” for $132,500;
- In May 2019, Aegis Capital settled a customer complaint alleging “unauthorized trading and unsuitable investment recommendations” for $569,962.38;
- In March 2018, Aegis Capital settled a customer complaint alleging “unsuitable investment recommendations, unauthorized trading, misrepresentations and omissions, breach of contract and breach of fiduciary duty” for $100,000; and
- In April 2018, Aegis Capital settled a customer complaint alleging “unsuitable investment recommendations, unauthorized trading, negligence, negligent supervision, federal securities law violations, Georgia blue sky law violations, control person liability and respondeat superior, breach of fiduciary duty and excessive trading . . .” for $800,000.
Churning & Excessive Trading Continue To Be Prevalent Issue In Brokerage Industry
Many of the allegations against Luftschein involve churning and excessive/unauthorized trading, which is when a stockbroker buys and sells securities in a customer’s account solely for the purpose of generating commissions. As alleged by FINRA in its action against Luftschein, churning constitutes a violation of securities laws and FINRA Rules.
Brokers are obligated to have a reasonable basis for recommending transactions (both the quality and quantity of the transactions) in customers’ accounts, which should take into account a variety of factors including risk tolerance and customer sophistication. Moreover, brokerage firms are obligated to supervise the activity of their brokers, especially if they are engaging in high-frequency trading in customer accounts.
Did You Suffer Losses Investing With Steven Luftschein At Aegis Capital Or Joseph Stone?
Silver Law Group has experience bringing FINRA arbitration claims on behalf of churning victims. If you or someone you know suffered financial losses due to Luftschein’s churning and/or excessive and unauthorized trading, please contact Silver Law Group at (800) 975-4799 or email email@example.com for a confidential consultation.