The Financial Industry Regulatory Authority (FINRA) has filed a complaint against Success Trade Securities, Inc (STS) and its CEO and President Fuad Ahmed (Ahmed) accusing them of improperly selling $18 million worth promissory notes. The promissory notes were issued by STS’ parent company Success Trade, Inc. (STI) to 58 investors. The notes were sold primarily to sports athletes in the NFL or NBA.
The FINRA complaint alleges that the STI notes were part of ponzi scheme to simply raise capital and fund STS’ operations while purportedly offering investors 12-26% returns. The investors were not aware of the risks of investing in the STI notes. For example, STS was at all times financially insolvent and could only meet its ongoing expenses by selling more STI notes and by continuing the scheme. Crucial risks such as the viability of the company are material risks that need to be disclosed to investors. The complaint also alleges that STS and Ahmed failed to register the STI notes as a private placement offering as required under Regulation D.
Problems with the notes began to emerge once the STI notes became due in 2012 through 2013. At that time, STS and Ahmed solicited noteholders to roll over or extend the terms of the STI notes at higher interest rates or offered customers an equity interest in STS. The complaint also alleges that in connection with the rollover and extended note sales the firm failed to disclose to some investors that the firm is financially unable to repay the notes that have become due.
STI note investors have been referred to the STS by Jinesh Pravin Brahmbatt (Branhmbatt), President and CCO of Jade Private Wealth Management, Inc. (JPW), an investment advisor firm located in McLean, Virginia. JPW has a relationship with STS and uses the firm as its broker dealer for its advisory business. In addition, some of the staff at STS are also employed by JPW as at least three of STS’ registered representatives are also JPW employees and work out of the McLean branch.
The attorneys at Gana LLP are experienced in investigating claims of financial fraud. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.