Wolper Law Firm Files FINRA Arbitration Claim Against Aegis Based On the Excessive Trading of Structured Notes

The Wolper Law Firm has filed a FINRA arbitration claim against Citigroup Global Markets, Inc. (Citigroup) arising from the sale of  Structured Notes.  The Financial Advisor responsible for the recommendations is Keith Dagostino (CRD #2837860).


Broker’s Background



Keith Dagostino was registered with Aegis Capital Corp. as a Financial Advisor from 2014-2023.  He is located in Woodbury, NY.  Keith Dagostino is currently registered with EF Hutton.  His past employments include Stifel, Nicoloaus, Oppenheimer and Ladenberg.

What are Structured Notes


Structured Notes are market-linked investments that offer a coupon to investors from the date of purchase through the date of maturity (typically 24 months).  The payment of the aforementioned income is connected to the performance of underlying securities—typically individual stocks or stock indices.  In this case, the Auto-call notes were each tied to the performance of between two or three underlying individual stocks.  The prospectus of the Structured Notes dictates that if all of the underlying individual stocks remains at or above a certain price (i.e., the “Coupon Barrier”), all is good in the world and the investor will continue to receive the stated income payment.  If, however, one of the underlying stocks falls to a price below the Coupon Barrier, the investor will no longer receive the stated income payment.  It necessarily follows that having multiple underlying stocks in the basket of the Structured Notes is riskier than a single underlying stock because it is more likely that at least one stock, among multiple stocks, will decline in value.


Separate and apart from the Coupon Barrier that dictates whether the investor receives income, each Structured Notes additionally states that the stocks underlying the note are being benchmarked at a specific price, known as the “Initial Level.”  If one of the underlying stocks declines to a certain level by the maturity date, known as the “Knock-in Barrier,” not only will the investor not receive income but they will be forced to purchase shares of the depreciated underlying stock at market value.  This is problematic because the cost basis associated with those same shares is commensurate with the Initial Level.  In other words, the investor will incur massive losses on day-one because they will own shares of stock worth far less than the Initial Level value assigned in the Structured Notes term sheet.  If, on the other hand, the underlying stocks appreciate in value, investors do not get to participate in the upside and the issuer can call the note; hence the name Structured Notes.


Structured Notes and other forms of Structured Notes are speculative in nature.  They are only appropriate for investors who are willing to subject their assets to significant portfolio decline.


The Arbitration Claim


According to the arbitration claim filed by the Wolper Law Firm, the Structured Notes recommended by Keith Dagostino were tied to the value of underlying stocks in the technology and consumer staples sectors, including Netflix, Under Armour, Twitter, Ulta, Skyworks Solutions, Overstock.com, Papa Johns, Haliburton, Caterpillar Under Armour and Skyworks Solutions.  Keith Dagostino also actively traded individual stocks that were speculative in nature, including penny stocks.  The Structured Notes and stocks were actively traded such that millions of dollars of shares were bought and sold.  Keith Dagostino’s trading strategy consistently resulted in losses in the customer account and even when trades were profitable it was nominal.  The net result of Keith Dagostino’s trade strategy resulted in large losses for the customers, who are retirees living on a fixed income.  The customers are inexperienced investors who were unaware of the unique characteristics of investing, generally, and Structured Notes, specifically.  The arbitration, which has been disputed, remains pending.


We Help Investors Recover Investment Losses


If you were recommended by Aegis or Keith Dagostino to invest in Auto-callable structured notes, and you experienced losses, contact the Wolper Law Firm for a free, confidential consultation.  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, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.


The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis.  Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.

Attorney Matthew Wolper

Attorney Matthew WolperMatt Wolper is a trial lawyer who focuses exclusively on securities litigation and arbitration. Mr. Wolper has handled hundreds of securities matters nationwide before the Financial Industry Regulatory Authority (FINRA), American Arbitration Association (“AAA”), JAMS, and in state and federal court. Mr. Wolper has handled and tried cases involving complex financial products and strategies ranging from traditional stocks and bonds to options, margin and other securities-based lending products, closed/open-end mutual funds, structured products, hedge funds, and penny stocks. [Attorney Bio]