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Exceptional and accessible legal representation across Kentucky and Nationwide

EXCEPTIONAL AND ACCESSIBLE LEGAL REPRESENTATION ACROSS KENTUCKY AND NATIONWIDE

SEC charges alleged bot trader, its principals with securities fraud

On Behalf of | Aug 2, 2022 | Securities Fraud |

Can robotic traders (“bots”) get higher returns than ordinary traders by trading faster? It’s possible they do, but if so, the difference is unlikely to yield a significantly higher return on investment for anyone but professional traders. Almost certainly, bot trading would not yield an ROI of 1% per day, as the Empires Consulting Corp. (EmpiresX) claimed.

In reality, EmpiresX had no trading bot at all. It was fake, according to the Securities and Exchange Commission.

The SEC has charged EmpiresX, its two founders, and its head trader with securities fraud after they allegedly lured investors with the promise of 1% daily returns. The company allegedly garnered at least $40 million with these false claims but actually used the investors’ money to buy or lease luxury goods and to make a payment on a second home.

Additionally, the SEC claims, EmpiresX told investors that it had filed SEC paperwork to operate as a registered hedge fund. They said that the company’s head trader was a licensed trader when he had actually been suspended by the National Futures Association due to alleged misappropriation of customer funds.

When their scheme began to collapse, the SEC says, EmpiresX and its principals broke promises to the investors, wound down the company and fled the U.S.

“The defendants allegedly engaged in an unregistered offering with a slew of fraudulent statements designed to lure investors with the prospect of steady daily profits,” said a spokesperson for the SEC Enforcement Division’s Crypto Assets and Cyber Unit.

The U.S. Department of Justice and the Commodity Futures Trading Commission (CFTC) announced parallel fraud charges against the three principals, and the CFTC also charged Empires Consulting Corp. with fraud.

The SEC is seeking:

  • Injunctions against any further securities law violations
  • Disgorgement of the ill-gotten gains
  • Officer and director bars against the two founders of EmpiresX

In its press release, the SEC did not say whether the Justice Department or the CFTC were seeking criminal penalties against the three principals.

You don’t have to wait for regulatory action in securities fraud cases

The SEC, the CFTC, the Justice Department and other state and federal agencies can all bring securities fraud charges against those suspected of wrongdoing. When those cases are successful, it is possible the agency will be able to recover some of the ill-gotten gains and return them to investors.

However, investors who have been defrauded do not have to wait for regulators to act. They can file individual actions against bad actors through the Financial Industry Regulatory Authority (FINRA). These actions are typically handled through mediation or arbitration.

If you believe you have been defrauded by a securities fund, broker or trader, contact an attorney experienced in securities law.