According to FINRA, Aeon Capital Inc. was censured and fined $10,000 for conducting a securities business while failing to maintain required minimum net capital and for failing to file required notices of net capital deficiencies.

The firm received a $150,000 Economic Injury Disaster Loan (EIDL) during the COVID-19 pandemic. This loan increased the firm's aggregate indebtedness and therefore its required minimum net capital. However, the firm failed to include the loan value when calculating aggregate indebtedness, causing it to inaccurately calculate its required net capital. As a result, the firm's net capital fell below the required minimum and remained deficient for over ten months until the firm added capital.

In a separate incident, the firm began selling stock warrants of a biotechnology company received as compensation for participating in a private placement. When the firm effected its eleventh sale of warrants, this constituted the eleventh transaction for its own investment account, which increased required net capital. The firm did not have the required minimum net capital until five months later when it added capital. The firm also failed to make and preserve accurate records of aggregate indebtedness and net capital, and filed inaccurate FOCUS reports.

Investors should understand that net capital requirements exist to ensure broker-dealers maintain sufficient liquid assets to meet obligations to customers and other creditors. When firms fall below minimum net capital, they pose increased risk to customer accounts. FINRA imposed a lower fine after considering the firm's revenues and financial resources.