Court Enters Judgment Against Former Trading Instructor for Defrauding Private Fund Investors

Litigation Release No. 24154 / June 4, 2018

Securities and Exchange Commission v. Gustavo A. Guzman, Civil Action No. 3:17-cv-00276 (W.D.N.C., filed May 24, 2017)

A federal district court entered a judgment on May 18, 2018 against Gustavo A. Guzman, a former options trading instructor, for misappropriating investor funds and making material misrepresentations to investors located in five states - North Carolina, South Carolina, Illinois, Washington, and California.

The SEC's complaint, filed on May 24, 2017 in federal court in the Western District of North Carolina, alleged that between at least April 2010 and at least August 2015, Guzman raised more than $2.1 million from investors for a purported equity options fund and a real estate fund that he managed. The complaint further alleged that Guzman misappropriated approximately a third of the investors' money, using it to pay himself and his personal expenses, and to make Ponzi payments to some of the investors. Guzman also allegedly sent investors false account statements and tax documents with exaggerated returns to conceal that he lost the remainder of the investors' funds through unsuccessful options trading.

The court entered a default judgment against Guzman for violating Sections 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The judgment orders Guzman to pay disgorgement of $253,820, prejudgment interest of $25,169, and a civil penalty of $160,000. The order also permanently enjoins Guzman from violating the above-referenced provisions and from participating in the issuance, purchase, offer, or sale of any security, other than for his own account.

For further information, see Litigation Release No. 23842 (May 24, 2017).