The SEC alleges that the day trader particularly
targeted fellow members of the Houston-area Lebanese and Druze communities,
raising more than $6 million during a five-year period from at least 33
investors. The day trader told prospective investors that he would pool their
investments with his own money and conduct high-frequency trading using a
supposed proprietary trading algorithm. He promised annual returns of 30
percent and assured investors that his program was safe and proven when in
reality it was a dismal failure, generating $1.5 million in losses. As he
failed to deliver the promised profits, the day trader told investors that his
funds were tied up in the Greek debt crisis and the MF Global bankruptcy among
other phony excuses.
The SEC is seeking an emergency court order to halt the scheme
and freeze the day trader‘s assets and those of his firm, FAH Capital Partners.
“[The day trader’s] affinity
scam preyed upon people’s tendency to trust those who share common backgrounds
and beliefs,” said David R. Woodcock, Director of the SEC’s Fort Worth Regional
Office. “[He] raised money by creating the aura of a successful day trader
among friends and family in his community, and he continued to mislead them and
hide the truth while trading losses mounted.”
For more information, visit SEC Charges Trader in Houston-Area Investment Scheme Targeting Lebanese and Druze Communities.
