Gary Costello


January 5, 2024

Type of alert:

Unauthorized Trading  

UPDATED 1/5/24

Attorneys at ChapmanAlbin are investigating Gary Costello, registered representative at Aegis Capital Corp., for numerous allegations of broker misconduct, including unauthorized trading and overconcentration in his clients’ accounts.

While registered with Oppenheimer & Co, Costello is alleged to have traded several speculative “penny stocks” in his clients’ accounts, generating high commissions and fees for himself while exposing his clients to increased risk.

Costello left Oppenheimer in late 2022 and registered with Truist Advisory Services in Palm Beach, Florida. Truist terminated him following allegations of misconduct involving numerous trade corrections and margin activity in his clients’ accounts. Trading “on margin” essentially allows investors to invest with borrowed money. While investors may see increased returns—and brokers may reap increased commissions and fees—margin trading exposes investors to substantial risk and is therefore considered unsuitable for many investors.

Costello continues to work as a registered broker at Aegis despite having no fewer than five pending claims against him. Investment professionals—and the firms that employ them—have a duty to put their clients’ needs before their own, protect customers from unnecessary risk, and fully disclose the risks associated with margin investing and “penny stocks,” amongst others.

If you believe you may have been wronged by an investment processional, contact ChapmanAlbin for a free consultation.

Gary Costello—former Oppenheimer & Co. registered representative—allegedly traded “penny stocks” and other highly speculative investments with his clients’ funds. These investments included shares in BioNano Genomics, a startup genetic testing company, and Lytus Technologies, an IT company trading at $0.29 per share. Costello—who since leaving Oppenheimer registered with Truist Investment Services and Aegis Capital—allegedly executed many of these trades without his clients’ permission.

“Penny stocks” are highly speculative investments in small companies whose shares are traded at relatively low prices. Generally, penny stocks:

  • Are priced under $5 per share and a typical penny stock is less than $1;
  • Are not traded on the major exchanges, but on Pink Sheets or the OTC Bulletin Board; and
  • Generate high commissions and fees for brokers and brokerage firms compared to the price of the stock.

Since trading penny stocks is extremely risky, they are generally unsuitable investments for any customer without a high-risk profile. Brokers and their registered representatives are prohibited from selling penny stocks without fully disclosing the risks. Penny stocks have often been used to perpetrate various scams.

Costello allegedly exposed his clients to even greater risk when he failed to diversify their investments. He allegedly “overconcentrated” his clients’ investment portfolios with speculative investments in the technology sector, ignoring more stable asset classes, such as bonds, altogether.

Brokers and their registered representatives have a duty to only recommend investment strategies that are suitable for their clients. When they fail in that duty, brokers may be liable to individual investors for damages. Overconcentration, unauthorized trading, and failure to disclose the risks associated with penny stocks are serious violations.

If you believe you may have been wronged by an investment professional, contact ChapmanAlbin today.

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