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December 30, 2014 at 10:23 AM
Among recent enforcement actions, the SEC charged a stock promoter in California with defrauding investors; three fund managers and their firm for diverting investor funds; two traders in Chile for insider trading; and a corporate attorney and his wife for insider trading on a client’s information.
SEC Charges Stock Promoter With Defrauding Investors
Efstratios “Elias” Argyropoulos, a Santa Barbara, California-based stock promoter, has been charged by the SEC with fraudulently raising nearly $3.5 million from investors from October 2010 through October 2013 supposedly to purchase Facebook and Twitter shares before their IPOs.
According to the agency, instead of using the money to buy pre-IPO shares, Argyropoulos and his firm (Prima Capital Group) used the investors’ capital primarily for day trading of stocks and options, as well as to pay off certain investors who complained when they didn’t receive the promised Facebook or Twitter shares.
A separate administrative proceeding found that Khaled Eldaher, a registered representative living in Austin, Texas, came up with a side agreement with Argyropoulos to solicit investors and receive 50% of the markup on Facebook shares he sold. Eldaher sold $362,887.50 worth of Facebook shares and was paid $15,478 by Prima Capital. He was later terminated by the broker-dealer for selling securities other than through the firm.
Argyropoulos has agreed to settle the SEC’s charges and be barred from working for an investment advisor or broker-dealer. Financial penalties will be determined at a later date. Eldaher will go before an administrative law judge at a public hearing.
This is not the first time that Argyropoulos has run afoul of regulators. The SEC complaint notes that in 1983, NASD censured and fined Argyropoulos, then associated with a registered broker-dealer, for depositing personal funds into a customer’s account to cover losses generated in the account. In 1995, the NASD censured, barred, and fined Argyropoulos $200,000 for use of discretion over client accounts without written authority from the clients.
Three Fund Managers, Firm Charged for Diverting Investor Funds
VERO Capital Management and three fund managers have been charged by the SEC with siphoning off investor funds for use in salvaging a side business.
According to the agency, VERO’s president, Robert Geiger, general counsel George Barbaresi and chief financial officer Steven Downey managed a pair of funds whose offering documents claimed a goal of achieving attractive returns by investing primarily in mortgage-backed securities.
However, when the three decided to wind down the funds, they kept $4.4 million via undocumented “bridge loans” to an affiliated company that supposedly was in the risk management business. They never told investors or the funds’ director that they were making those loans to their other company from investor funds, bur rather lied to the funds’ custodial bank to withdraw $800,000 from the funds’ bank account to divert to the other company.
In addition, the firm failed to have the funds audited by independent auditors for 2012 or 2013 and also failed to arrange for a surprise examination to be performed as required.
