U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23010 / May 30, 2014
Securities and Exchange Commission v. Steven McCraw, Civil Action No. 4:14-CV-0348 (E.D. Tex.) (May 30, 2014)
SEC Charges Accomplice in Forex Trading Scheme
The Securities and Exchange Commission today filed charges against Steven M. McCraw for aiding and abetting a fraudulent foreign currency exchange (“forex”) trading scheme. The SEC’s case was filed in the U.S. District Court for the Eastern District of Texas.
The SEC alleges that McCraw knowingly or recklessly provided substantial assistance to Kevin G. White and his company, KGW Capital Management, LLC, in perpetrating a fraudulent scheme that raised approximately $7.4 million between September 2011 and July 2013. The SEC’s complaint alleges that White and KGW Capital raised investor funds through Revelation Forex, a purportedly successful “highly specialized hedge fund” that claimed to employ a sophisticated, low-risk, high-return forex trading strategy. McCraw helped White attract potential investors to Revelation Forex by calculating alleged trading returns that were used in various marketing materials and on Revelation Forex’s website. McCraw also took the lead in creating an ostensibly “independent” website that ranked Revelation Forex as one of the best performing forex funds in the world. McCraw also met with potential investors and solicited investments for Revelation Forex.
According to the SEC, Revelation Forex’s actual trading did not generate the positive returns that were represented to investors, but instead lost more than $2 million. Moreover, White used investor funds for various personal expenses and to fund other unrelated and undisclosed investments and businesses, including a propane gas company operated by McCraw. The SEC previously halted White’s fraudulent scheme in SEC v. Kevin G. White, et al., Civil Action No. 4:13-cv-0383 (E.D. Tex. July 9, 2013).
McCraw is charged with violating or aiding and abetting violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. He has agreed to settle the SEC’s charges by consenting to injunctions against future violations of these provisions, injunctions against engaging in certain specific conduct, disgorgement of ill-gotten gains (with prejudgment interest), and civil penalties to be determined by the district court.
The forex market is a large and generally liquid financial market in which the risk of loss for individual investors can be substantial. The SEC has previously warned individual investors about the risks involved with forex trading.The SEC’s investigation was conducted by Michael A. Umayam, Keith J. Hunter, and R. Joann Harris of the Fort Worth Regional Office. The SEC’s litigation against McCraw was led by Janie L. Frank.