Gurudeo "Buddy" Persaud, an ex-Money Concepts registered representative, is being charged by the Securities and Exchange Commission (SEC) for running a Florida based Ponzi scheme. An SEC investigation revealed that Mr. Persaud accumulated close to $1,000,000.00 from family and friends by promising them 6-18% returns with little to no risk. What his clients did not know was that Mr. Persaud's investment philosophy was based on the earth's gravitational forces and its effects on the valuation of stock prices. He also believed that the moon could influence investors to sell their stocks. In addition, Mr. Persaud hid his involvement in his own company, White Elephant Trading Co., by acting as an independent advisor that sold investments in White Elephant to his clients in contract form. The SEC is seeking to recoup Persaud's gains, obtain injunctive relief, and impose financial penalties against him.
A Ponzi scheme is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors or investors higher up the pyramid to pay an earlier investor's returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash. In Persaud's case, the SEC said that Persaud used investors' money to pay other investors while generating factitious account statements to conceal losses and maintain client confidence.
Selling away is the inappropriate practice of an investment professional who sells or solicits securities or investments not held or approved by the brokerage firm with which the professional is associated with. Under NASD and FINRA rules, brokerage firms must approve investments offered by their investment professionals and supervise its sales. Money Concepts can be held liable for Mr. Persaud's activities because it either failed to establish a reasonable supervisory system, or because it failed to implement an existing reasonable supervisory system. Even if Money Concepts did not know of Mr. Persaud's activities, it can still be liable to investors for damages.
Have you suffered investment losses in Buddy Persaud's Ponzi scheme? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at firstname.lastname@example.org for answers to any of your questions about this blog post and/or any related matter.