Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
June 01, 2018 at 09:34 AM
The Securities and Exchange Commission charged a former registered representative with defrauding long-standing brokerage customers in an $8 million investment scam.
According to the SEC’s complaint, Steven Pagartanis, who was affiliated with a registered broker-dealer, told some investors — including retirees who had been Pagartanis’ customers for many years — that he would invest their funds in either a publicly traded or private land development company.
“As part of the alleged scam, Pagartanis preyed on his customers’ trust, duping them to write checks payable to his own entity,” said Marc Berger, director of the SEC’s New York Regional Office, in a statement. “Regardless of how long investors have worked with their brokers, they should always confirm that recommended investments are approved for sale by their brokerage firm before transferring funds.”
In response to this, the SEC also issued an Investor Alert about warning signs that a broker may be offering investments outside of the broker’s firm.
According to the SEC, Pagartanis promised that the funds would be safe and also promised guaranteed monthly interest payments on the investments. At Pagartanis’ direction, his investors wrote checks payable to a similarly named entity that was secretly controlled by Pagartanis.
In all, the customers invested approximately $8 million, which Pagartanis used to pay personal expenses and make the guaranteed “interest” payments to his customers. To conceal the scam, which unraveled earlier this year when Pagartanis stopped making the so-called interest payments to customers, Pagartanis created fictitious account statements reflecting ownership interests in the land development companies.
The SEC’s complaint, filed in federal district court in Brooklyn, charges Pagartanis with violating the antifraud provisions of the federal securities laws. The SEC is seeking a judgment ordering Pagartanis to disgorge his allegedly ill-gotten gains plus prejudgment interest, and to pay financial penalties.
The Suffolk County District Attorney’s Office also filed criminal charges against Pagartanis.
SEC Charges Investment Banker in Insider Trading Scheme
The SEC charged an investment banker with repeatedly using his access to highly confidential information in order to place illicit and profitable trades in advance of deals on which the bank was providing investment banking advisory services.
According to the SEC’s complaint, Woojae “Steve” Jung, an investment banking executive at a prominent investment bank, used sensitive client information in order to trade in the securities of 12 different companies prior to the announcement of market-moving events.
The SEC alleges that Jung used an account held in the name of a friend living in South Korea to place these illegal trades and generate profits of approximately $140,000 between 2015 and 2017. As alleged in the complaint, by using his friend’s brokerage account, Jung attempted to evade detection by skirting his employer’s requirements that he pre-clear his trades and that he use an approved brokerage firm that would have reported the trading to his employer.
The SEC’s complaint charges Jung with fraud and seeks disgorgement of allegedly ill-gotten gains, prejudgment interest, penalties and injunctive relief. The complaint also names Jung’s friend, Sungrok Hwang, as a relief defendant to have him disgorge illicit gains that Jung generated by trading in his brokerage account.
