The Securities and Exchange Commission filed fraud charges today against Kay X. Yang and her company, Xapphire LLC, for allegedly raising $16.5 million by making false and misleading statements to approximately 70 investors and for misappropriating more than $4 million of the investors' funds.

According to the SEC's complaint, between April 2017 and April 2021, Yang, a resident of Mequon, Wisconsin, and Xapphire LLC engaged in the unregistered offer and sale of securities issued by her entities AK Equity Group LLC and Xapphire Fund LLC. The complaint further alleges that Yang falsely represented to prospective investors, many of whom were members of the Hmong-American community in Wisconsin and Minnesota, that she would invest their money primarily through foreign exchange trading, they could expect annual returns ranging from 20% to 50%, and the trading was consistently successful. As alleged in the complaint, in reality, Yang used less than half of the investors' money for foreign exchange trading and had many months with large net trading losses, resulting in negative returns. In addition, the complaint alleges that Yang also misappropriated approximately $4,060,000 of the investors' money to fund her and her family's lifestyle, including spending on casinos, travel, homes, and cars, and to repay investors in a previous venture. The SEC also named Yang's husband, Chao Yang, as a relief defendant for improperly receiving proceeds of the fraud according the complaint.

The SEC's complaint, filed in the Eastern District of Wisconsin, alleges that Yang and Xapphire LLC violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, and 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 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. It also seeks injunctive relief, disgorgement plus prejudgment interest, civil penalties, and a prohibition on Yang serving as the officer or director of a public company.

The SEC's investigation, which is continuing, has been conducted by BeLinda Mathie and Kathleen Sweeney and supervised by Steven Klawans of the SEC's Chicago Regional Office. The SEC's litigation will be led by Robert Moye. The SEC appreciates the assistance of the Commodity Futures Trading Commission, the Wisconsin Department of Financial Institutions, Division of Securities, the Australian Securities and Investments Commission, the Finansinspektionen, the Securities Commission of The Bahamas, and the United Kingdom Financial Conduct Authority.