Malcolm Segal of Langhorne Pennsylvania, a former registered representative of Aegis Capital Corp. was indicted by a federal grand jury in Philadelphia for nine counts of mail fraud and wire fraud in connection with operating a $15.5 million Ponzi Scheme. United States v. Malcolm Segal (E.D. Pa. June 25, 2015). Following the release of his indictment, United States Magistrate Judge Richard A. Lloret issued a bench warrant for Segal’s arrest.
Simultaneously, Segal was also charged with several counts of federal securities by the United States Securities & Exchange Commission. SEC v. Segal (E.D. Pa. July 1, 2015).
According to both the federal indictment and the SEC Action, from at least 2009 through July 2014, Segal raised approximately $15.5 million from at least 50 investors through the fraudulent sale of certificates of deposit (“CDs”).
Sufficient Evidence of Securities Fraud Found
Sufficient evidence was found at least by the Grand Jury that Segal, also operating under the name J&M Financial Inc. and National CD Sales Inc., during the course of his association with Aegis Capital Corp. falsely told his Aegis Capital brokerage customers that he had access to banks that offered higher interest rates on FDIC-insured CDs than were otherwise available to the general public.
However, unbeknownst to investors, Segal in fact redeemed most of the CDs before they matured and on several occasions took the proceeds among other things to fund his extravagant lifestyle, including paying off his home mortgage and purchasing a residence in Palm Beach County Florida.
In fact, as part of Segal’s alleged $15.5 million fraud, from t least 2009 through July 2014, Segal raised approximately $8.1 million from the fraudulent sale of entirely non-existent CDs, and after 2011 purchased no CDs at all but instead simply commingled the investor funds in a bank account he controlled.
Arbitration Actions Against Filed Against Aegis Capital
Segal was terminated by Aegis Capital on July 28, 2014 after he refused to cooperate with the investigation of a complaint by one of his Aegis Capital Customers. Since that time, several customers have filed arbitration actions against Aegis Capital totaling several million dollars in damages as a result of Segal’s conduct.
According to the federal indictment, on several occasions, Segal used Aegis Capital Corp. letterhead to perpetrate his scheme by confirming the purchase of CDs, and on at least three occasions wired a total of almost $1 million from three separate customers directly from Aegis Capital to Segal’s company, J&M Financial Inc., where at least according to FINRA records, and Segal’s registration with Aegis Capital, Segal discloses himself as a partner.
Aegis Capital Corp. is a registered broker-dealer with its principal place of business at 810 7th Avenue, 18th Floor New York, New York 10019. Aegis operates from a series of geographically dispersed “independent” or “franchise” branch offices wherein for a higher commission pay-out, its “independent offices” pay all their own administrative expenses.
Segal’s conduct, commonly referred to as “selling away,” takes place when the registered representative sells securities outside, or at least without the required approval of the broker-dealer, and is the most frequently committed violation by off-site registered representatives. NASD Notice to Members 86-85, Compliance with NASD Rules of Fair Practice in the Employment and Supervision of Off-Site Personnel (Sept. 1986).
Courts and securities arbitration panels, in identical circumstances, have long held brokerage firms responsible for the conduct of their registered representatives in “selling away” cases based upon among other things, control person liability and the broker-dealer’s failure to supervise.
Segal’s customers are urged to consult with an attorney or take legal action to preserve their rights.
Guiliano Law Firm
Our practice is limited to the representation of investors in claims, for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.