SEC Charges Two Men With Fraud in Fake Trading Accounts Scheme
Litigation Release No. 24257 / September 5, 2018
Securities and Exchange Commission v. Jeffrey Goldman and Christopher Eikenberry, No. 2:18-cv-13550 filed September 5, 2018
The Securities and Exchange Commission charged two Michigan men with fraud for their roles in a fake accounts scheme perpetrated by a phony day-trading firm, Nonko Trading.
The SEC alleges that Jeffrey Goldman of West Bloomfield, Michigan, and Christopher Eikenberry of Birmingham, Michigan, participated in and profited from a scheme to defraud Nonko's customers out of at least $1.4 million. While Nonko marketed itself as a state-of-the-art platform for day-trading professionals, the SEC alleges that it secretly provided customers with training accounts that merely simulated actual trading. Nonko team members allegedly pocketed customers' deposits and used the money for personal expenses and for Ponzi-like payments to customers who wanted to close their accounts. According to the complaint, Nonko deliberately targeted traders who were inexperienced or had a history of trading losses and lured them by promising generous leverage, low trading commissions, and low minimum deposit requirements.
In a parallel action, the U.S. Attorney's Office for the District of New Jersey today announced criminal charges against Goldman and Eikenberry.
The SEC previously charged four other individuals and two entities in connection with the Nonko fraud. Two of those individuals, Naris Chamroonrat and Adam Plumer, have settled the SEC's charges. Chamroonrat also pled guilty in a parallel criminal case and is awaiting sentencing. Criminal charges against two other individuals charged by the SEC, Yaniv Avnon and Ran Armon, are pending.
The SEC's complaint charges Goldman and Eikenberry with fraud and with aiding and abetting Nonko's fraud and broker-dealer registration violations. Each are charged with violating and aiding and abetting violations of Section 17(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. § 77q(a)] and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") [15 U.S.C. § 78j(b)] and Rules 10b-5(a) and 10b-5(c) thereunder [17 C.F.R. §§ 240.10b-5(a), (c)] and aiding and abetting violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5(b) thereunder [17 C.F.R. §§ 240.10b-5(b)] and Section 15(a)(1) of the Exchange Act [15 U.S.C. § 78o(a)(1)]. The SEC is seeking injunctions and the disgorgement of their allegedly ill-gotten gains, plus interest and penalties.
The SEC's investigation was conducted by Simona Suh, Barry O'Connell, and John D. Marino of the Market Abuse Unit and Elzbieta Wraga of the New York Regional Office. The case has been supervised by Mr. Sansone. The SEC's litigation will be led by Ms. Suh and Mr. O'Connell. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, Federal Bureau of Investigation, Financial Industry Regulatory Authority, Australian Securities and Investments Commission, Securities Commission of The Bahamas, Financial Supervisory Commission of the Cook Islands, Israel Securities Authority, Financial Services Commission's Nevis Branch, Ontario Securities Commission, Monetary Authority of Singapore, and Securities and Exchange Commission of Thailand.