Aegis Capital Corp has agreed to pay a $275,000 fine as part of a settlement with the Financial Industry Regulatory Authority (FINRA).
As of 2019, Aegis has paid several million dollars to its corporate parent. Aegis recorded the payments in its general ledger as expenses for management services.
Although Aegis had a written agreement with its corporate parent, the agreement did not adequately define the management services to be provided. As a result, Aegis was required to account for the payments as capital withdrawals, but failed to do so in more than a dozen net capital calculations—albeit without any change to Aegis’ net capital and the FOCUS file.
By maintaining inaccurate general ledgers, net capital calculations and FOCUS filings, Aegis violated Exchange Act §l 7(a) and Rules 17a-3 and l 7a-5, along with FINRA Rules 4511 and 2010.
Aegis’ Failure to Oversee Recordkeeping of Payments to Its Parent Authority FINRA Rule 3110 requires broker-dealers to establish and maintain a system of oversight, including written oversight procedures, reasonably designed to achieve compliance with applicable securities laws, regulations, and rules.
As of 2019, Aegis’ system, including written procedures, for overseeing the preparation of the general ledger, net capital calculations and FOCUS filings was not reasonably designed. Aegis had no system or procedures in place to determine whether payments to its parent company should be classified as distributions rather than expenses. Aegis also had no system in place to determine how payments to its corporate parent affected Aegis’ net capital calculations and FOCUS deposits.
Therefore, Aegis violated FINRA Rule 3110 and 2010.
From at least 2014 until July 2025, Aegis allowed an unregistered person to have a supervisory role in its accounting department. She was not registered as a Business Professional, although she had the authority to sign checks and withdraw funds from the company’s bank accounts, and she oversaw and approved most of the entries in the Aegis general ledger.
Therefore, Aegis violated FINRA Rules 1210 and 2010 and NASD Rule 1031.
From July 2025, a person registered as a Business Professional performs the functions listed above.
In addition to the $275,000 fine, Aegis agreed to a reprimand and an undertaking that a member of senior management who is a registered principal of the firm must certify in writing that the firm has implemented a system of oversight, including written supervisory procedures, that is reasonably designed to achieve compliance with FINRA Rules 310 and 2010.