Compliance

Texas Trader Charged With Conning Investors In Scheme Branded "Dismal Failure"

Eliane Chavagnon Reporter 30 January 2013

Texas Trader Charged With Conning Investors In Scheme Branded

The Securities and Exchange Commission has charged a day trader in Sugar Land, TX, for defrauding investors in his so-called high-frequency trading program, as part of which he provided falsified brokerage records that overstated assets and hid significant losses. 

The SEC’s complaint - filed in federal court in Houston - claims that Firas Hamdan targeted members of the Houston-area Lebanese and Druze communities, raising over $6 million during a five-year period from at least 33 investors. 

Hamdan allegedly 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 per cent, while assuring investors that his program was safe and proven when it was in fact a “dismal failure” that generated $1.5 million in losses, the SEC said.

He also made “several other false claims to potential investors,” the authority said. “As he failed to deliver the promised profits, Hamdan told investors that his funds were tied up in the Greek debt crisis and the MF Global bankruptcy among other phony excuses.”

The authority is seeking an emergency court order to stop the scheme and freeze Hamdan’s assets and those of his firm, FAH Capital Partners. It is also seeking a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and financial penalties.

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