The Financial Industry Regulatory Authority (FINRA) announced that it has filed a Temporary Cease-and-Desist Order (TCDO) to halt further fraudulent activities by Washington, D.C.-based Success Trade Securities, Inc. and its CEO & President, Fuad Ahmed, as well as the misuse of investors’ funds and assets. FINRA also issued a complaint against Success Trade Securities and Ahmed charging fraud in the sales of promissory notes issued by the firm’s parent company, Success Trade, Inc., in which Ahmed holds a majority ownership interest. FINRA filed the TCDO, to which Ahmed and the company agreed, thus immediately freezing their activities, based on the belief that ongoing customer harm and depletion of investor assets are likely to continue before a formal disciplinary proceeding against Success Trade Securities and Ahmed will be completed.
Success Trade Securities is an online broker-dealer that operates through Just2Trade and LowTrades. In its complaint, FINRA alleges that Success Trade Securities, Ahmed and other registered representatives at the firm sold more than $18 million in Success Trade promissory notes to 58 investors, many of whom are current or former NFL and NBA players, while misrepresenting or omitting material facts. Specifically, FINRA’s complaint alleges that Ahmed and Success Trade Securities misrepresented that they were raising $5 million through the sale of promissory notes and continued to make this representation, even as the sales exceeded the original offering by more than 300 percent. Most of the notes promised to pay an annual interest rate of 12.5 percent on a monthly basis over three years, with some notes promising to pay interest as high as 26 percent.
FINRA also alleges that Ahmed and Success Trade Securities failed to disclose the amount of the company’s existing debt to investors and that it was unable to make future interest payments without raising money from new investors. In addition, FINRA charges that Ahmed and Success Trade Securities misrepresented how the proceeds would be used, instead improperly using the funds to make unsecured loans to Ahmed and to make interest payments to existing noteholders. FINRA further alleges that Ahmed and Success Trade Securities misrepresented the rate of return and exempt status of the private placement offering through which the notes were sold.
TO VIEW THE COMPLAINT GO TO http://disciplinaryactions.finra.org/viewdocument.aspx?DocNB=31831
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