FINRA Expels Broker-Dealer and Bars CEO for Fraudulent Scheme Sold to NFL and NBA Players
By Courtney Werning
The Financial Industry Regulatory Authority ("FINRA") announced today that it has expelled broker-dealer Success Trade Securities, Inc. and its CEO Fuad Ahmed for the fraudulent sale of promissory notes that was nothing more than a Ponzi scheme. In April 2013, FINRA 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.
FINRA found that from 2009 through 2013, Ahmed and Success Trade sold $19.4 million in Success Trade promissory notes to investors while omitting material facts from the offering documents that would have revealed that the parent company was in dire financial condition. Success Trade and Ahmed also misrepresented to investors that the proceeds would be used for business expenses to promote and build the parent company's businesses when, in fact, the funds were used to make unsecured loans to Ahmed for personal expenses and to make interest payments to existing noteholders.
In addition to the membership expulsion, the firm and Ahmed are jointly and severally ordered to pay approximately $13.7 million in restitution to 59 investors, the majority of whom were current and former NFL and NBA players.