A former representative of a dually registered broker-dealer and investment advisor has agreed to be barred from the securities industry after he was charged with selling $8.1 million in fake CDs to fund his luxury lifestyle.
The U.S. Securities and Exchange Commission accepted a settlement on Monday from Malcolm Segal, who worked as a Langhorne, Pa., representative affiliated with New York-based Aegis Capital. Segal allegedly ran a Ponzi-like scheme in which he stole more than $3.2 million from clients and other investors.
In February, Segal pled guilty to criminal charges, including 11 counts of mail fraud and three counts of wire fraud, in the U.S. District Court for the Eastern District of Pennsylvania.
According to the criminal indictment, between January 2011 and May 2015, Segal served as president of National CD Sales, a company formed by him purporting to broker sales of CDs and to purchase CDs on behalf of clients.
Segal allegedly told investors that he was purchasing CDs for them that paid annual interest of up to 12 percent from reputable dealers, but instead used their funds for personal expenses and to make payments to other investors.
As it became more difficult to meet the scheme’s interest and redemption obligations, Segal allegedly began to sell investments and transfer funds from his brokerage customers’ accounts, according to the SEC’s original complaint against Segal.
The SEC alleges that the stolen funds were used to purchase a condominium in Florida, to pay for vacations, to pay down personal debts and to buy other luxuries.
In an administrative proceeding, the SEC barred Segal from association with any broker, dealer, investment advisor, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. He’s also barred from participating in the sale, promotion or issuance of any penny stock.