SEC Charges Unregistered Investment Adviser with Fraud

September 27, 2011

The SEC brought administrative charges against Shreyans Desai and ShreySiddh Capital, LLC (SSC) alleging fraudulent conduct by Desai in connection with the purchase and sale of securities for individuals who provided Desai with more than $245,000 to invest on their behalf.  According to the SEC, from April 2009 to February 2011, Desai, acting through SSC, an unregistered investment adviser founded by Desai, made numerous materially false and misleading statements to potential investors, including that SSC was a securities broker registered with the SEC and that potential investors would receive returns of at least 50% if they invested their money with SSC. Desai also guaranteed to investors that he would not lose their money. On the basis of Desai’s misrepresentations, five individuals gave Desai money to invest on their behalf through SSC. Desai then misappropriated investor money, using it to, among other things, make donations to a local religious institution and pay the personal debts and expenses of Desai’s family members. Desai also lost investor money through bad trades. To hide the fact that Desai had misappropriated or lost investor money, the SEC stated that Desai provided SSC investors with account statements that overstated the value of the investors’ accounts by as much as 300%.

According to the SEC, Desai and SSC also acted as securities brokers by engaging in the regular business of effecting transactions in securities for the accounts of others and by holding themselves out as securities brokers that were registered with the SEC. At the time, however, neither Desai nor SSC was registered with the SEC as a broker and neither was associated with a registered broker-dealer.

Please click here to access this litigation release.


Enforcement Actions, Investment Advisers, Investment Companies