SEC CHARGES TRADER IN HOUSTON-AREA INVESTMENT SCHEME

(The following is a reformatted version of a press release
issued by The U.S. Securities and Exchange Commission and
obtained via www.sec.gov.) 
SEC Charges Trader in Houston-Area Investment Scheme Targeting
Lebanese and Druze Communities 
Washington, D.C., Jan 29, 2013 -- The Securities and Exchange
Commission today charged a day trader in Sugar Land, Texas, with
defrauding investors in his supposed high-frequency trading
program and providing them falsified brokerage records that
drastically overstated assets and hid his massive trading
losses. 
The SEC alleges that Firas Hamdan particularly targeted fellow
members of the Houston-area Lebanese and Druze communities,
raising more than $6 million during a five-year period from at
least 33 investors. Hamdan told prospective investors that he
would pool their investments with his own money and conduct
high-frequency trading using a supposed proprietary trading
algorithm. Hamdan promised annual returns of 30 percent and
assured investors that his program was safe and proven when in
reality it was a dismal failure, generating $1.5 million in
losses. 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. 
Additional Materials
SEC Complaint 
http://www.sec.gov/litigation/complaints/2013/comp-pr2013-13.pdf 
The SEC is seeking an emergency court order to halt the scheme
and freeze Hamdan’s assets and those of his firm, FAH Capital
Partners. 
“Hamdan’s affinity scam preyed upon people’s tendency to trust
those who share common backgrounds and beliefs,” said David R.
Woodcock, Director of the SEC’s Fort Worth Regional Office.
“Hamdan raised money by creating the aura of a successful day
trader among friends and family in his community, and he
continued to mislead them and hide the truth while trading
losses mounted.” 
According to the SEC’s complaint filed in federal court in
Houston, Hamdan is well-known in the Lebanese and Druze
communities in the Houston area and is a former treasurer of the
Houston branch of the American Druze Society. Hamdan found
investors for his trading program by talking with his friends
and family in these communities. As word spread about his
purported trading success, he asked existing investors to
solicit their friends for investments. 
The SEC alleges that Hamdan misrepresented to investors that he
generated positive returns in 59 of 60 months between 2007 and
2012. He showed them phony documentation to support his false
claims. For instance, a purported brokerage statement he
provided investors for the first quarter of 2010 showed an
opening balance of more than $2.3 million with quarterly trading
gains of $2.7 million for a closing balance above $5.1 million.
An actual brokerage statement obtained by SEC investigators for
Hamdan’s account during that same period shows the opening
balance at just $27,970.76 and the closing balance at
$148,210.02, with quarterly trading losses of $7,452.80. 
According to the SEC’s complaint, Hamdan made several other
false claims to potential investors. For instance, he lied about
the existence of a cash reserve account that secured their
investments. Hamdan falsely stated that investments were further
secured by a $5 million “key-man” insurance policy. He also
falsely claimed that a well-known hedge fund manager in the
Dallas area made a million-dollar investment with him and
promised to invest more based on Hamdan’s continuing success. 
The SEC’s complaint alleges that Hamdan violated the antifraud
provisions of the Securities Act of 1933 and the Securities
Exchange Act of 1934. The complaint seeks various relief
including a temporary restraining order, preliminary and
permanent injunctions, disgorgement of ill-gotten gains with
prejudgment interest, and financial penalties. 
The SEC’s investigation was conducted by Jonathan Scott, Timothy
Evans, and Mark Pittman of the Fort Worth Regional Office. Bret
Helmer will lead the SEC’s litigation. Investors affected by
this scheme who have questions can contact the Fort Worth office
investigative staff at dfw@sec.gov. 
http://www.sec.gov/news/press/2013/2013-13.htm
Home | Previous Page
Modified: 01/29/2013 
(bjh) NY 
#<873920.660640.3.4.0.0.76>#
 
 
Press spacebar to pause and continue. Press esc to stop.