Sunday, March 25,
2018 12.48PM / SEC
The US Securities and Exchange
Commission on Friday, announced charges and a preliminary injunction and asset
freeze against Niket Shah, a New Jersey resident who stole more than $250,000
in a Ponzi scheme in which his friends and coworkers invested.
Based on investor complaints, the SEC
moved quickly to investigate and charge Shah. According to the SEC's
complaint, unsealed on March 22, 2018, in federal court in Brooklyn, New York,
Shah used Spark Trading Group, LLC to defraud more than 15 investors into
contributing hundreds of thousands of dollars to two funds that Shah
marketed. Shah obtained investments for the funds by lying about his
success as a trader, Spark Trading's returns, and how he intended to use
investors' money, including altering financial statements to make the
funds appear profitable when they were actually losing money.
For instance the complaint alleges
that Shah promised investors he would pay them monthly returns and guaranteed
against losses. According to the complaint, Shah misused investor money
for his own benefit and suffered substantial losses on the amounts actually
invested. When investors sought their money back, he lied and said the
money had been frozen by government agencies, including the Commission.
"Fraudsters who swindle their
friends and colleagues using doctored financial statements and outright lies should
expect the Commission and its staff to act swiftly and decisively, as we have
here today," said Melissa Hodgman, Associate Director of the SEC's
The SEC's Complaint charges Spark
Trading and Shah with violations of the antifraud provisions of the federal
securities laws. The SEC is seeking return of allegedly ill-gotten gains
with interest and civil money penalties.
A court hearing was held on March 23,
2018, on the SEC's complaint and requested relief at which the Honorable Brian
M. Cogan granted the SEC's request for a preliminary injunction, asset freeze,
order against the destruction of documents, and an accounting. The court
had previously issued a March 12, 2018, temporary asset freeze against Spark
Trading and Shah, and ordered them to provide an accounting of all money
received from investors.
The SEC's investigation, which is
continuing, has been conducted by W. Bradley Ney, D. Ashley Dolan, and J.
Ashley Ebersole in the SEC's Washington, D.C. office and supervised by Melissa
Robertson. The litigation will be led by Kenneth J. Guido, W. Bradley Ney,
and J. Ashley Ebersole, under the supervision of Fred Block. The SEC would like
to thank the Nadex Exchange for its substantial assistance in connection with
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