FINRA Filed An Enforcement Proceeding Against Against Aegis Capital Corp. Broker Kishan Parikh After Allegations of Excessive and Unsuitable Trading
Kishan Parikh (CRD#: 5506554), also known as Sean Parikh, was a previously registered Broker at Aegis Capital Corp. in New York, NY. He entered the securities industry in 2008 and previously worked for Max International Broker/Dealer Corp.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March 2021, FINRA initiated a regulatory action against Kishan Parikh, which remains pending. The FINRA allegation states, “Parikh was named a respondent in a FINRA complaint alleging that he made unsuitable recommendations and excessively traded the accounts of his customers. The complaint alleges that Parikh controlled the trading in the customers’ accounts and executed trades with a total principal value of approximately $31.1 million. Parikh’s excessive and unsuitable trading in the customers’ accounts caused combined losses of more than $33,000. At the same time, Parikh’s trading generated gross sales credits and commissions of $179,112, of which Parikh received at least $89,000. The complaint also alleges that Parikh executed trades with a total principal value of approximately $4.2 million in the accounts of customers without their prior authorization.” The default decision fines Parikh $10,000, suspends him from association with any FINRA member in all capacities for two years, and requires him to pay restitution of $40.919 plus interest; if there is no further action on this complaint, it becomes final on August 4, 2021.
For a copy of the FINRA sanction, click here.
In addition, Kishan Parikh has been the subject of two customer complaints, including one that remains pending:
● February 2021–“Time frame: unspecified. Claimants allege unsuitable investments.” The customer dispute remains pending.
● May 2017–”TIME FRAME: 02/24/2015 TO 05/17/2017. CLAIMANT ALLEGES RR ENGAGED IN EXCESSIVE TRADING AND UNSUITABLE INVESTMENT RECOMMENDATIONS.” The customer dispute was settled for $499,999.
For a copy of Kishan Parikh’s FINRA BrokerCheck, click here.
Excessive trading often occurs when a Financial Advisor puts his or her interests ahead of the clients and makes transactions solely for the purpose of generating commissions. Financial Advisors have a regulatory duty to recommend suitable investment strategies. One of the components of the suitability analysis is quantitative suitability.
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. 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.
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