The Financial Industry Regulatory Authority fined Aegis Capital Corp US $950,000 for selling unregistered penny stocks and related supervisory violations. FINRA also fined two individuals, Charles Smulevitz and Kevin McKenna, who served successively as chief compliance and anti-money laundering officers for the firm. The individuals were fined for supervisory and AML violations. In an Order Accepting Offer of Settlement, FINRA claimed that, between April 2009 and June 2011, Aegis liquidated nearly 3.9 billion shares of five microcap stocks that seven customers had deposited into their accounts at the firm. None of the stocks, claimed FINRA, were registered with the Securities and Exchange Commission or exempt from registration. FINRA claimed that, during the relevant time period, Aegis failed to make meaningful inquiries into the circumstances of the customers’ sales or “supposed registration exemptions” for the sale of these five and an additional five microcap stocks “despite the presence of ‘red flags’ indicating that the sales could be illicit distributions of unregistered stocks.” FINRA also claimed that Mr. Smulevitz and Mr. McKenna, during their respective terms as the firm’s AML officer, failed to “reasonably” detect and review "red flags” of potentially suspicious transactions. As a result, they did not make a “reasoned determination whether or not to report the suspicious transactions to the Financial Crimes Enforcement Network … by filing a Suspicious Activity Report … as appropriate.” For their alleged offenses, Mr. Smulevitz agreed to payment of a fine of US $5,000 and to be suspended for 30 days from serving as a registered principal of any FINRA member firm, while Mr. McKenna consented to be fined US $10,000 and be suspended for 60 days from serving as a registered principal of any FINRA member firm. Aegis also agreed to retain an independent consultant.