by Brian Mahany
Success Trades Securities has a great name. They also have the financial backing of many NFL and NBA players. Regulators say that some of these players invested in the company in exchange for a promised rate of return between 12 and 26%. Banking news source bank rate.com says the average interest rate on savings accounts is about 0.5%. With that as a comparison, 26% sounds too good to be true.
It probably is.
The Financial Industry Regulatory Authority – FINRA for short – claims that Success Trades Securities has been improperly soliciting people to invest in the company. Normally, stockbroker fraud complaints involve unscrupulous brokers investing client monies in unsuitable stocks and investments of other companies. Here, FINRA says that Success Trades’ owner Fuad Ahmed was raising money for his own brokerage business – and to line his pockets.
According to a story published in InvestmentNews, Ahmed used some of the investor’s money to make unsecured loans to himself and to pay off previous investors. If true, it sounds like a classic Ponzi scheme.
For now, Success Trades signed a cease and desist order but continues to dispute the allegations and says it will fight.
This isn’t Success Trades first brush with the law and regulators. In 2009, the firm was sanctioned for having inadequate operating capital. That meant the firm was dangerously close to not having enough money to keep its doors open. We wonder if the many players and other investors who gave money to the company knew of the firm’s true financial shape when investing.
Last year, a random audit of 120 customer accounts revealed a large number of regulatory violations including inadequate supervision and no account paperwork. Auditors also uncovered evidence of illegal money laundering activity. The firm paid a $100,000 fine and was censured.
Sports professionals and entertainers are often the victim of financial scams. Unfortunately while they represent the best of their chosen professions, most have little time to conduct financial due diligence. Because of their wealth and media exposure, they become targets of fraudsters.
While no one has lost money yet in Success Trades, FINRA claims the firm is in “dire financial condition.” Those allegations and last week’s cease and desist order will make it difficult for the firm’s principals to recruit new capital.
If you have lost money to a Ponzi scheme or a stockbroker who recommended unsuitable investments, you may have a claim. Stockbroker fraud cases and claims against investment advisers are primarily handled through arbitration. If you invested directly in the brokerage firm, however, you may be able to file directly with the court. We handle most stockbroker fraud cases on a contingent fee basis meaning no legal fees unless we win.
If you have lost $100,000 or more because of a stockbroker, investment adviser or other financial professional, give us a call. The stockbroker fraud lawyers at Mahany & Ertl have helped many victims of get back their hard earned money. We also take cases involving other frauds including legal and accounting malpractice and Ponzi schemes.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine; Minneapolis, Minnesota and San Francisco, California. Fraud recovery available in many jurisdictions.
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