Aegis Capital Corp. Registered Broker Corey Alexander Johnson Suspended by FINRA After Allegations of Exercising Discretion Without Authorization
Corey Alexander Johnson (CRD#: 5752206) is a registered Broker at Aegis Capital Corp. in Melville, NY. He entered the securities industry in 2010 and previously worked for Global Arena Capital Corp. and Prestige Financial Center, Inc.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March 2021, FINRA sanctioned Corey Alexander Johnson, assessing a civil and administrative penalty of $5,000 and suspending him from all capacities for 30 days beginning April 19, 2021. The FINRA sanction states, “Without admitting or denying the findings, Johnson consented to the sanctions and to the entry of findings that he exercised discretionary trading authority to effect transactions in customer accounts without the customers’ providing written authorization and without his member firm accepting any of the accounts as discretionary.”
For a copy of the FINRA sanction, click here.
Corey Alexander Johnson has no previous disciplinary disclosures.
For a copy of Corey Alexander Johnson’s FINRA BrokerCheck, click here.
FINRA regulations require that a customer’s written authorization is required before a broker-dealer can carry out transactions in the customer’s account. In addition, the broker-dealer’s member firm needs to approve the broker-dealer’s authorization. These measures are intended to protect the customer. Discretionary trading allows the broker-dealer to unilaterally decide to buy or sell securities at any price and not have to check with the client first. Exercising discretion without authorization can be costly to investors, and broker-dealers and their member firms, too.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, other investments, financial situation and needs, and tax status; other factors to consider include the investor’s investment objectives, time horizon, liquidity needs, risk tolerance, and any other relevant details disclosed by the customer.
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