U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23834 / May 12, 2017
Securities and Exchange Commission v. Mohamud Abdi Ahmed and 2waytrading, LLC, No. 17-cv-1478 (D. Minn. filed May 4, 2017)
SEC Halts Fraudulent Conduct by Recidivist and Unregistered Investment Adviser Firm
The Securities and Exchange Commission today announced that it obtained an asset freeze and court order halting an ongoing investment fraud, orchestrated by a recidivist, that falsely promised safe and unrealistic returns to convince clients to provide access to their brokerage accounts.
According to the SEC's complaint, filed in federal court in Minneapolis on May 4, 2017 and unsealed this week, Mohamud Abdi Ahmed and 2waytrading, LLC have been offering investment advice to clients since 2014. The complaint alleges they have been falsely promising unrealistic double-digit investment returns and assuring clients that Ahmed's risky options trading investment strategy is safe and secure. The complaint alleges that Ahmed and 2waytrading are also using these false claims to convince clients to give them access to their clients' brokerage accounts so Ahmed can place trades on their behalf. The complaint further alleges that Ahmed hid the fact that the SEC previously stopped him from orchestrating a securities fraud targeting investors in the Somali immigrant community in San Diego, Seattle, and elsewhere and that Ahmed had been convicted of wire fraud and ordered to pay restitution of $551,250, serve 21 months in prison, and remain on three years' supervised release after his release from prison.
The Honorable Paul A. Magnuson, Senior Judge of the U.S. District Court, issued a temporary restraining order that imposed the freeze on Ahmed's and 2waytrading's assets and prohibits them from making any investment decisions or accessing any brokerage accounts they do not own. The order also temporarily prohibits Ahmed and 2waytrading from violating the antifraud provisions, and Judge Magnuson has scheduled a hearing on May 18 for Ahmed to show cause why a preliminary injunction should not be entered against him.
The SEC's complaint charges Ahmed and 2waytrading with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and (2) of the Investment Advisers Act of 1940. The SEC is seeking financial penalties and disgorgement of ill-gotten gains as well as permanent injunctive relief.
The SEC's investigation was conducted by Brent W. Wilner and supervised by Diana K. Tani, John W. Berry, and Michele W. Layne of the Los Angeles office. The SEC's litigation is being led by Lynn M. Dean, David J. Van Havermaat, and Mr. Wilner. The SEC appreciates the assistance of the United States Attorney's Office for the District of Minnesota.