WASHINGTON (AP) — The Financial Industry Regulatory Authority filed a cease-and-desist order against Success Trade Securities, saying Thursday that the online investment firm scammed its investors, which include a number of professional athletes.
The private industry watchdog issued a complaint against Success Trade and its CEO and President Fuad Ahmed accusing it of fraud in the sales of $18 million in notes issued by the firm's parent company, Success Trade Inc.
Success Trade, whose activities have been frozen, didn't immediately return a message seeking comment.
FINRA claims that the firm, which operates through Just2Trade and LowTrades, Ahmed and other representatives sold more than $18 million in notes to 58 investors, many of whom are current or former NFL and NBA players. But the company and its officials claimed they were raising just $5 million even after sales significantly exceeded the original offering, FINRA said. clientele
The firm and Ahmed failed to disclose the company's amount of existing debt and the fact that it would be unable to make future interest payments without raising money from new investors, FINRA said. The firm also misrepresented how the proceeds would be used and improperly used the funds to make loans to Ahmed and interest payments to existing investors, according to FINRA.
Under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a disciplinary panel. Sanctions can include fines, orders to pay restitution, censures, suspensions or a barring from the securities industry.