Blake Kantor a/k/a "Bill Gordon" was indicted in the United States District Court for the Eastern District of New York on conspiracy to commit wire fraud, obstruction of an official proceeding, and making false statements to Special Agents of the Federal Bureau of InvestigationREAD the FULL TEXT INDICTMENT https://www.justice.gov/usao-edny/press-release/file/1053266/download Federal prosecutors alleged that in March 2014, Kantor established Blue Bit Banc or Blue Bit Analytics, Ltd. ("BBB"), a company that purportedly sold binary options. From approximately 2014 to 2017, Kantor and others allegedly solicited from 713 investors about $2.1 million but did not disclose to those investors that BBB computer software allowed the company to fraudulently alter data so that the probability of investors earning a profit favored BBB. Further, Kantor allegedly converted investors' funds into ATM Coin, a purportedly worthless cryptocurrency.
Today's BrokeAndBroker.com Blog considers the lawsuit of a registered rep who handled his own expungement arbitration against his former employer J.P. Morgan Securities. Sometimes these pro se cases go well. Sometimes they just go off the rails. Regardless of the outcome, the self-represented party often takes some satisfaction in knowing that he did it "My Way." He may not have won his case but he did get to end his lawsuit humming one helluva pop tune.
In a Complaint filed in the United States District Court for the Eastern District of Virginia, the SEC alleged that from at least February 2015, Amrit J. S. Chahal used his company, Kane Capital Investment Group, LLC, to fraudulently solicit approximately $1.4 million from about 50 individuals by falsely claiming to be an experienced and successful trader who could generate above-market returns through a low-risk trading strategy. The Complaint alleges that contrary to his representatings, Chahal had substantially no financial/securities industry experience or trading securities on behalf of clients. After sustaining purporedly substantial losses, Chahal allegedly lied to his clients about their investments,and diverted funds for such personal use as to pay for his luxury car, rent, travel, dining, and other living expenses, and to make Ponzi-like payments to earlier investors. READ the FULL TEXT Complaint. https://www.sec.gov/litigation/complaints/2018/comp24114.pdf
In anticipation of the institution of proceedings by the SEC but without admitting or denying the findings, Arlington Capital management, Inc. and Joseph F. LoPresit submitted an Offer of Settlement, which the federal regulator accepted. In the Matter of Arlington Capital management, Inc. and Joseph F. LoPresti, Respondents (Order Instituting Administrative And Cease-And-Desist Proceedings, Making Findings, And Imposing Remedial Sanctions And A Cease-And-Desist Order; Invest. Adv. Act Rel. No. 4885; Admin. Proc. File No. 3-18437 / April 16, 2018) (the "OIP"). https://www.sec.gov/litigation/admin/2018/ia-4885.pdf In accordance with the terms of the settlement, the SEC Censured Respondents Arlington and LoPresti and ordered them to cease and desist from committing or causing any violations and any future violations of the Advisers Act and Rules thereunder. Respondent Arlington was ordered to pay a $125,000.00 civil penalty and Respondent LoPresti to pay a $75,000.00 civil penalty. As set forth in pertinent part of the "Summary" portion of the OIP:
1. From at least 2012 to 2015, Arlington, a registered investment adviser, issued
misleading advertisements about its investment performance in written communications to
clients and prospective clients and in weekly radio broadcasts and video webcasts by Joseph F.
LoPresti, Arlington's President, 80 percent owner, and Chief Compliance Officer ("CCO").
2. During the relevant period, Arlington invested its clients' assets in a variety of
model portfolios that it designed from computer trading models developed at Arlington. These
computer models, collectively known as the Proactive Asset Allocation Strategy ("PAAS"), used
proprietary indicators and asset class rankings to trigger signals to buy or sell securities in
clients' accounts. Arlington began implementing the PAAS models to manage client accounts in
2010. Over the years, Arlington made numerous adjustments or improvements to the PAAS
models based on additional historical testing and/or consideration of recent market results. Each
new iteration of the PAAS model was implemented in order to improve return or reduce
volatility based on back-tested historical results.
3. Arlington regularly advertised performance results using the PAAS models' backtested
results running back to 1995. At times, after Arlington adjusted a model, the performance
results under previous iterations of the model would be restated as if the new version of the
model had been in effect during the entire period. In some instances, Arlington highlighted the
performance of its models in advertisements without disclosing the represented returns were
hypothetical, back-tested performance results. In other advertisements, this information was
disclosed in small print or in ways that otherwise lacked prominence. And in all advertisements,
Arlington failed to disclose that that the represented performance results were derived using
models that had been adjusted over the years with the benefit of hindsight.
4. During the relevant time period, Arlington also failed to adopt and implement
written policies and procedures reasonably designed to prevent violations of the Advisers Act in
connection with its advertisements. LoPresti was responsible for Arlington's advertising and, as
CCO, its policies and procedures.