SEC Charges Owner of Trading Website With Binary Options Fraud

The Securities and Exchange Commission charged Mark Suleymanov with engaging in an online binary options scheme that defrauded retail investors out of approximately $4 million.

The SEC's complaint alleges that from at least 2012 to 2016, Suleymanov engaged in the unregistered offer and sale of binary options, which are securities that pay out depending on the outcome of a "yes/no" proposition, such as whether a specific equity security will close at or above a specified price on a given trading day.

Suleymanov promoted and sold the options on the SpotFN website and other related websites he controlled, and misrepresented the profitability of investing in the binary options, as well as investors' ability to access their funds. Suleymanov allegedly used software to manipulate investors' trading results to increase investor losses, and prevented many investors from withdrawing their funds.

As alleged in the complaint, the SpotFN website also falsely stated that an investor's funds would be held in a separate account and used only for trading options, not for SpotFN's business expenses. In fact, Suleymanov commingled investor funds in his bank accounts and misused certain of the funds for business and personal expenses.

The complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and a penalty. Suleymanov has agreed to a bifurcated settlement where he will be permanently enjoined from these provisions. The settlement, which is subject to court approval, reserves the issues of disgorgement, prejudgment interest and a civil penalty for further determination by the court upon motion of the SEC.

SEC Charges Broker, CPA With Shell Company Fraud

The SEC announced fraud charges against a Florida-based CPA, a former broker and his wife for their roles in a fraudulent scheme involving the creation and sale of a public shell company and false regulatory filings to facilitate the sale.

According to the SEC, David Dreslin and Michael Toups created a shell company, Anglesea Enterprises Inc., by filing false and misleading registration statements and periodic reports with the SEC, creating a phony business plan, and appointing nominal officers and directors to conceal their control over the company.

The goal of the alleged scheme was to sell Anglesea in a reverse merger for profit. The SEC also alleges that Leslie Toups served as Anglesea's majority shareholder and director and signed filings and other documents that contained materially false and misleading statements and omissions over a multiyear period.

The SEC seeks injunctions, civil penalties, and penny stock and officer-and-director bars from Dreslin, Michael Toups and Leslie Toups, and disgorgement plus interest from Dreslin.

Without admitting or denying the SEC's allegations, Leslie Toups agreed to settle the SEC's charges against her by agreeing to be barred, for five years from serving as an officer or director of a public company or participating in a penny stock offering, to pay a $25,000 penalty, and to permanent injunctions against violating the charged provisions of the federal securities laws. The settlement is subject to court approval.

Michael Toups, the CFO of a China-based Chinese fuel storage company, was previously charged by the SEC with fraud in 2016 for issuing periodic filings and press releases that substantially overstated the company's storage capacity at three fuel storage depots in China. The SEC's litigation against Toups is ongoing.

—Read last week's enforcement roundup here: Floyd Mayweather, DJ Khaled Fined by SEC for Unlawfully Touting ICOs: Enforcement