U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25895 / November 17, 2023
Securities and Exchange Commission v. Alan Z. Appelbaum, No. 22-81115-CIV-CANNON/Reinhart (S.D. Fla. filed July 28, 2022)
SEC Obtains Final Judgment Against Former Registered Representative Charged with Unsuitable Investment Recommendations and Unauthorized Trading
On November 14, 2023, the U.S. District Court for the Southern District of Florida entered a final judgment against Alan Z. Appelbaum, a former registered representative of Aegis Capital Corporation.
The SEC’s complaint was filed on July 28, 2022. According to the complaint, Appelbaum violated the customer-specific suitability requirements applicable to broker-dealers by making unsuitable recommendations of certain variable interest rate structured products, commonly referred to as “steepeners,” to seven retail customers. The complaint alleges that the recommendations were unsuitable because the customers had “moderate” risk tolerances and an unwillingness to lose their entire invested principal and, in many cases, also had an investment time horizon inconsistent with the securities. In addition, the complaint alleges that Appelbaum made false and misleading statements to some of the customers to prevent them from closing their accounts and engaged in unauthorized trading.
Without admitting or denying the SEC’s allegations, Appelbaum consented to entry of the final judgment, which provides for permanent injunctive relief under Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder. The final judgment also orders Appelbaum to pay a civil monetary penalty of $50,000 and disgorgement of $42,000 plus prejudgment interest of $5,500.
The SEC’s litigation was led by James Connor and Eugene Hansen.