SEC v. Idris D. Mustapha, Southern District of New York (June 22, 2016) — Complaint

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 
 
 
SECURITIES AND EXCHANGE 
COMMISSION, 
    Plaintiff, 
 v. 
 
IDRIS D. MUSTAPHA 
    Defendant. 
 
 
 
16-CV-____ (___) 
 
 
 
 
 
COMPLAINT 
 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows: 
SUMMARY 
1. This case concerns a fraudulent scheme in which Idris Dayo Mustapha, a citizen 
of the United Kingdom, hacked numerous United States-based brokerage accounts of unwitting 
U.S. investors, including at least one New York City investor, and placed unauthorized trades in 
their accounts in the stock of several publicly traded companies during at least April and May 
2016.  Mustapha then profitably traded in those same securities through his own brokerage 
account, generally in the minutes before or after he traded in the accounts of innocent victims.     
2. For example, on May 17, 2016, Mustapha caused a victim to purchase the stock 
of a public company at increasing prices through the victim’s hacked brokerage account, and 
Mustapha then coordinated his own trading in order to sell other shares of that same stock at a 
profit in his own brokerage account.  Mustapha accessed his brokerage account to make the May 
17, 2016 trades with the same computing device that he used to hack into the victim’s account to 
make unauthorized trades on the same day.   

2 
 
3. During April and May 2016, Mustapha made profits of at least $68,000 when he 
sold shares of the same stock that he caused the hijacked accounts to purchase.  The account 
holders he victimized collectively lost more approximately $289,000 during the same time 
period. 
4. Between March 2016 and May 2016, Mustapha transferred approximately 
$100,000 out of his brokerage account to a bank account in his name.  Mustapha also has sought 
to withdraw the approximate $100,000 cash balance currently in his brokerage account.  
5. As a result of the conduct alleged herein, Mustapha violated, and unless restrained 
and enjoined will continue to violate, 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 Rule 10b-5 thereunder [17 C.F.R. § 340.10b-5].   
6. The Commission seeks emergency preliminary relief, including a temporary 
restraining order against further violations of the federal securities laws and an emergency asset 
freeze to preserve assets necessary to satisfy any eventual judgment against Mustapha.  The 
Commission also requests an immediate accounting, expedited discovery, a repatriation order, 
and an evidence preservation order to facilitate the prompt resolution of this matter on the merits.   
7. The Commission also seeks a permanent injunction against Mustapha, enjoining 
him from engaging in the transactions, acts, practices, and courses of business alleged in this 
Complaint, disgorgement of all ill-gotten gains from the unlawful conduct set forth in this 
Complaint, together with prejudgment interest, civil penalties pursuant to Section 20(d) of the 
Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 
§ 78u(d)(3)], and such other relief as the Court may deem appropriate. 
 

3 
 
JURISDICTION AND VENUE 
8. This Court has jurisdiction over this action pursuant to Section 22(a) of the 
Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15 
U.S.C. §§ 78u(d), 78u(e), and 78aa]. 
9. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C. 
§ 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Certain of the acts, practices, 
transactions and courses of business alleged in this Complaint, including trades in securities 
listed on the New York Stock Exchange, occurred within the Southern District of New York, and 
were effected, directly or indirectly, by making use of means or instrumentalities of 
transportation or communication in interstate commerce, or the mails.  In addition, Mustapha 
accessed certain brokerage accounts through an order management system managed by a 
computer software company based in the Southern District of New York.  At least one of 
Mustapha’s victims resides in the Southern District of New York.   
DEFENDANT 
10. Idris Dayo Mustapha, (“Mustapha”), age 30, is a citizen of the United Kingdom 
and holds a United Kingdom passport.  Mustapha opened a brokerage account in his name on or 
about February 26, 2016 at a United States-based brokerage firm (the “Executing Broker”).  The 
securities Mustapha received after purchasing stock, and the money he received for selling stock 
were “cleared,” or held, by another United States-based brokerage firm (the “ Clearing Broker”).   
RELATED PARTIES AND BACKGROUND 
11. The Clearing Broker is registered with the Commission and its principal offices 
are located in Stamford, Connecticut. 
12. Mustapha’s Executing Broker is registered with the Commission and its principal 

4 
 
offices are located in San Diego, California. 
13. Mustapha electronically accessed his account at his Executing Broker through an 
order management system (t he “Platform”) managed by a computer software company based in 
New York.   
14. Several of Mustapha’s victims have brokerage accounts with a firm registered 
with the Commission and based in East Brunswick, New Jersey (the “New Jersey Broker”).  The 
New Jersey Broker, like Mustapha’s Executing Broker, clears its trades through the Clearing 
Broker.  “Clearing” is the procedure by which the Clearing Broker processes and completes the 
purchase and sale of securities. 
15. At least two other brokerage firms, which are not based in the United States, and 
at which Mustapha’s other victims have or had accounts, used the Platform to allow customers to 
access their online accounts.   
FACTS 
16. On or about February 26, 2016, Mustapha opened a brokerage account with the 
Executing Broker.   
17. On or about March 3, 2016, Mustapha deposited approximately $32,000 into his 
brokerage account.  Mustapha transferred the money from a United States-based bank account in 
his name.   
April 2016 Account Intrusions 
18. On or about April 18 and 19, 2016, Mustapha, acting alone or in concert with 
others, hacked into the brokerage accounts of five customers of the New Jersey Broker (the 
“April Victims”) and caused unauthorized trades to be placed in the April Victims’ accounts.  
Passwords to the April Victims’ accounts had been reset on or about April 18 and 19, 2016, 

5 
 
through unauthorized access to an administrative user’s account.   
19. On the same days, Mustapha purchased and sold shares of the same securities as 
the April Victims in his own brokerage account.  Mustapha accessed his own brokerage account 
through a device whose internet protocol (“IP”) address and MAC Address (unique computer 
identifier) matched the IP address and MAC Address he had used on several previous occasions.   
20. Mustapha knowingly caused unauthorized trading activity in the April Victims’ 
accounts that corresponded with his own trading activity. 
21. On April 18, 2016, Mustapha purchased and sold shares of Regulus Therapeutics 
Inc. (“RGLS”) in his own brokerage account and, acting alone or in concert with others, caused 
April Victim No. 1 to purchase and sell RGLS shares.  First, Mustapha caused April Victim No. 
1 to purchase RGLS shares in April Victim No. 1’s account at the New Jersey Broker.  Mustapha 
then sold RGLS shares in his own account.  Mustapha also caused April Victim No. 1’s account 
to sell shares of RGLS that day.  April Victim No. 1 had not previously purchased or sold RGLS 
securities and did not authorize the trades in April Victim No. 1’s account.   
22. On April 18, 2016, Mustapha purchased and sold shares of Yirendai Ltd. 
Sponsored ADR (“YRD”), Cnova N.V . Shares (“CNV”), and/or K12 Inc. (“LRN”) in his own 
brokerage account and, acting alone or in concern with others, caused April Victims No. 1, 2, 3, 
and 4 to purchase and sell YRD, CNV, and/or LRN shares in their respective brokerage 
accounts.  April Victims No. 1, 2, 3, and 4 had not previously purchased or sold these securities 
and did not authorize these trades in their accounts.   
23. On April 19, 2016, Mustapha purchased shares of Applied Optoelectronics, Inc. 
(“AAOI”) in his own account before he, acting alone or in concert with others, caused April 
Victim No. 5 to purchase AAOI shares in April Victim No. 5’s account at the New Jersey 

6 
 
Broker.  Mustapha then sold AAOI shares in his own account on the same day.  April Victim No. 
5 had not previously purchased or sold AAOI securities and did not authorize the trades in April 
Victim No. 5’s account.  
May 2016 Account Intrusions 
24. In or about May 2016, Mustapha, acting alone or in concert with others, hacked 
into the brokerage accounts of at least four additional unwitting United States-based account 
holders (the “May Victims”), who held brokerage accounts at foreign brokerage firms.  These 
foreign brokerage firms used the Platform to give their customers, including the May Victims, 
electronic access to their accounts.     
25. On various dates in May 2016, Mustapha, acting alone or in concert with others, 
caused May Victims No. 1, 2, and 3 to purchase and sell securities of various public companies 
that traded in United States’ markets, including, but not necessarily limited to, Aurus Medical 
Holding AG (“EARS”), Attunity Ltd. (“ATTU”), The Chefs’ Warehouse, Inc. (“CHEF”), Aerie 
Pharmaceuticals, Inc. (“AERI”), Archrock Partners, L.P. (“APLP”), and L.B. Foster Company 
(“FSTR”).  May Victims No. 1, 2, and 3 did not authorize these trades in their accounts.  
Mustapha traded in the shares of each of these companies on the same dates that he caused May 
Victims No. 1, 2, and 3 to trade in them.  
26. On May 17, 2016, Mustapha caused May Victim No. 4, who had not traded any 
securities in his account for several months, to purchase shares of Lawson Products, Inc. 
(“LAWS”) at prices per share that increased during the course of the purchases.  After causing 
May Victim No. 4 to purchase LAWS stock, Mustapha sold LAWS short (i.e., sold stock that he 
did not yet own; short-selling a stock is, in effect, a bet that the stock’s price will decrease) at 
these higher prices.  Then, Mustapha caused May Victim No. 4’s account to sell LAWS stock 

7 
 
until the stock price decreased to approximately its original value.  At or around that time, 
Mustapha began purchasing LAWS stock (to cover his short position) at the lower prices.  
Mustapha made profits from the difference between the price at which he sold LAWS short and 
the price at which he subsequently purchased LAWS shares.     
27. Specifically, at approximately 1:33:26 p.m. ET to 1:34:49 p.m. ET, Mustapha 
caused May Victim No. 4 to purchase LAWS shares at prices that increased from as low as 
$18.99 per share to a high of $19.49 per share.  During that period of trading, the unauthorized 
trading in the May Victim No. 4 account comprised approximately 13,779 shares of the 
approximately 14,379 LAWS shares traded at that time.  At or about that time, Mustapha sold 
short at least 4,200 shares of LAWS stock at $19.49 per share in his own account.  Within 
minutes, Mustapha caused May Victim No. 4’s account to sell LAWS stock as the price declined 
to as low as approximately $18.71 per share.  Then, about one minute later, Mustapha purchased 
LAWS stock at approximately $18.75 per share in his own account, which allowed him to profit 
by purchasing LAWS stock at a lower price per share than the price per share at which he sold 
LAWS stock short.   
28. The trading volume in LAWS stock on May 17 increased dramatically from an 
average daily trading volume that month of approximately 14,000 shares to more than 170,000 
shares.  Mustapha caused May Victim No. 4 to trade more than 120,000 shares of LAWS that 
day.  Through his own brokerage account, Mustapha purchased and sold, or short sold, 
approximately 22,532 shares of LAWS that day.   
29. On May 17, 2016, Mustapha accessed the account of May Victim No. 4 with a 
MAC address identical to the MAC address associated with the device Mustapha used to access 
his own brokerage account on several prior occasions in 2016.  In addition, Mustapha accessed 

8 
 
the account of May Victim No. 4 on May 17, 2016 with an IP address that was an “anonymizer,” 
or an anonymous proxy tool, to mask his true originating IP address.    
30. Mustapha received approximately $12,000 as a result of the LAWS trading, and 
May Victim No. 1 lost approximately $48,000 in account value as a result of that trading. 
31. As a result of the conduct described herein, Mustapha defrauded each of the April 
Victims and May Victims by causing the unauthorized purchase and sale of securities in their 
account. 
32. Mustapha’s unauthorized trading in April and May 2016 negatively affected the 
victimized accounts.  Mustapha caused the victimized accounts to purchase more than $5 million 
(aggregate) of publicly traded stock, and the victims realized aggregate l osses of more than 
$200,000.    
33. In addition, between March 2016 and May 2016, Mustapha transferred more than 
$100,000 from his brokerage account to a bank account in his own name.   
34. The current cash balance in Mustapha’s brokerage account at the Clearing Broker 
is approximately $100,000.    
FIRST CLAIM FOR RELIEF 
FRAUD IN THE OFFER OR SALE OF SECURITIES 
(Violations of Section 17(a)(1) and (3) of the Securities Act) 
 
35. Paragraphs 1 through 34 are re-alleged and incorporated by reference. 
36. By reason of the conduct described above, Mustapha, in connection with the offer 
or sale of securities, by the use of the means or instrumentalities of interstate commerce or of the 
mails, directly or indirectly, acting with the requisite degree of knowledge or state of mind 
(i) employed devices, schemes, or artifices to defraud; and (ii) engaged in transactions, practices, 
or courses of business which operated or would operate as a fraud or deceit upon any persons, 

9 
 
including purchasers or sellers of the securities.    
37. By reason of the conduct described above, Mustapha violated Securities Act 
Section 17(a) [15 U.S.C. § 77q(a)]. 
SECOND CLAIM FOR RELIEF 
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES  
(Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 
thereunder) 
 
38. Paragraphs 1 through 34 are re-alleged and incorporated by reference. 
 
39. By reason of the conduct described above, Mustapha, directly or indirectly, in 
connection with the purchase or sale of securities, by the use of the means or instrumentalities of 
interstate commerce or of the mails, or of any facility of any national securities exchange, 
intentionally, knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; 
and (ii) engaged in acts, practices, or courses of business which operated or would operate as a 
fraud or deceit upon any persons, including purchasers or sellers of the securities. 
40. By reason of the conduct described above, Mustapha violated Exchange Act 
Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder. 
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that this Court: 
A. Temporarily, preliminarily, and permanently restrain and enjoin 
Mustapha, his officers, agents, servants, employees and attorneys, and those persons in 
active concert or participation with him who receive actual notice of the injunction by 
personal service or otherwise, and each of them, from violating Section 17(a) of the 
Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 
78j(b)], and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]  . 
B. Order Mustapha to disgorge, with prejudgment interest, all ill-gotten gains 

10 
 
obtained by reason of the unlawful conduct alleged in this Complaint; 
C. Order Mustapha to pay civil monetary penalties pursuant to Section 20(d) 
of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 
U.S.C. § 78u(d)(3)]; and 
D. Grant such other and further relief as this Court may deem just and proper. 
JURY DEMAND 
The Commission demands a jury in this matter for all claims so triable. 
 
DATED this 22nd day of June, 2016. 
 
      Respectfully submitted, 
                                           __________________________ 
David Stoelting 
Eric A. Forni* 
Susan Cooke Anderson* 
Martin F. Healey* 
 
U.S. Securities and Exchange Commission 
Boston Regional Office 
33 Arch Street, 24
th
 Floor 
Boston, MA  02110 
(617) 573-8827 (Forni) 
[email protected] 
 
*Not admitted in the S.D.N.Y. 
 

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
    Plaintiff, 
 v. 
 
IDRIS D. MUSTAPHA 
    Defendant. 
 

 
 

16-CV-____ (___) 
 
 
 
 

 
COMPLAINT 

 Plaintiff, Securities and Exchange Commission (the “Commission”), alleges as follows: 

SUMMARY 

1. This case concerns a fraudulent scheme in which Idris Dayo Mustapha, a citizen 

of the United Kingdom, hacked numerous United States-based brokerage accounts of unwitting 

U.S. investors, including at least one New York City investor, and placed unauthorized trades in 

their accounts in the stock of several publicly traded companies during at least April and May 

2016.  Mustapha then profitably traded in those same securities through his own brokerage 

account, generally in the minutes before or after he traded in the accounts of innocent victims.     

2. For example, on May 17, 2016, Mustapha caused a victim to purchase the stock 

of a public company at increasing prices through the victim’s hacked brokerage account, and 

Mustapha then coordinated his own trading in order to sell other shares of that same stock at a 

profit in his own brokerage account.  Mustapha accessed his brokerage account to make the May 

17, 2016 trades with the same computing device that he used to hack into the victim’s account to 

make unauthorized trades on the same day.   



2 
 

3. During April and May 2016, Mustapha made profits of at least $68,000 when he 

sold shares of the same stock that he caused the hijacked accounts to purchase.  The account 

holders he victimized collectively lost more approximately $289,000 during the same time 

period. 

4. Between March 2016 and May 2016, Mustapha transferred approximately 

$100,000 out of his brokerage account to a bank account in his name.  Mustapha also has sought 

to withdraw the approximate $100,000 cash balance currently in his brokerage account.  

5. As a result of the conduct alleged herein, Mustapha violated, and unless restrained 

and enjoined will continue to violate, 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 Rule 10b-5 thereunder [17 C.F.R. § 340.10b-5].   

6. The Commission seeks emergency preliminary relief, including a temporary 

restraining order against further violations of the federal securities laws and an emergency asset 

freeze to preserve assets necessary to satisfy any eventual judgment against Mustapha.  The 

Commission also requests an immediate accounting, expedited discovery, a repatriation order, 

and an evidence preservation order to facilitate the prompt resolution of this matter on the merits.   

7. The Commission also seeks a permanent injunction against Mustapha, enjoining 

him from engaging in the transactions, acts, practices, and courses of business alleged in this 

Complaint, disgorgement of all ill-gotten gains from the unlawful conduct set forth in this 

Complaint, together with prejudgment interest, civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)], and such other relief as the Court may deem appropriate. 

 



3 
 

JURISDICTION AND VENUE 

8. This Court has jurisdiction over this action pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Sections 21(d), 21(e), and 27 of the Exchange Act [15 

U.S.C. §§ 78u(d), 78u(e), and 78aa]. 

9. Venue lies in this Court pursuant to Section 22(a) of the Securities Act [15 U.S.C. 

§ 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa].  Certain of the acts, practices, 

transactions and courses of business alleged in this Complaint, including trades in securities 

listed on the New York Stock Exchange, occurred within the Southern District of New York, and 

were effected, directly or indirectly, by making use of means or instrumentalities of 

transportation or communication in interstate commerce, or the mails.  In addition, Mustapha 

accessed certain brokerage accounts through an order management system managed by a 

computer software company based in the Southern District of New York.  At least one of 

Mustapha’s victims resides in the Southern District of New York.   

DEFENDANT 

10. Idris Dayo Mustapha, (“Mustapha”), age 30, is a citizen of the United Kingdom 

and holds a United Kingdom passport.  Mustapha opened a brokerage account in his name on or 

about February 26, 2016 at a United States-based brokerage firm (the “Executing Broker”).  The 

securities Mustapha received after purchasing stock, and the money he received for selling stock 

were “cleared,” or held, by another United States-based brokerage firm (the “Clearing Broker”).   

RELATED PARTIES AND BACKGROUND 

11. The Clearing Broker is registered with the Commission and its principal offices 

are located in Stamford, Connecticut. 

12. Mustapha’s Executing Broker is registered with the Commission and its principal 



4 
 

offices are located in San Diego, California. 

13. Mustapha electronically accessed his account at his Executing Broker through an 

order management system (the “Platform”) managed by a computer software company based in 

New York.   

14. Several of Mustapha’s victims have brokerage accounts with a firm registered 

with the Commission and based in East Brunswick, New Jersey (the “New Jersey Broker”).  The 

New Jersey Broker, like Mustapha’s Executing Broker, clears its trades through the Clearing 

Broker.  “Clearing” is the procedure by which the Clearing Broker processes and completes the 

purchase and sale of securities. 

15. At least two other brokerage firms, which are not based in the United States, and 

at which Mustapha’s other victims have or had accounts, used the Platform to allow customers to 

access their online accounts.   

FACTS 

16. On or about February 26, 2016, Mustapha opened a brokerage account with the 

Executing Broker.   

17. On or about March 3, 2016, Mustapha deposited approximately $32,000 into his 

brokerage account.  Mustapha transferred the money from a United States-based bank account in 

his name.   

April 2016 Account Intrusions 

18. On or about April 18 and 19, 2016, Mustapha, acting alone or in concert with 

others, hacked into the brokerage accounts of five customers of the New Jersey Broker (the 

“April Victims”) and caused unauthorized trades to be placed in the April Victims’ accounts.  

Passwords to the April Victims’ accounts had been reset on or about April 18 and 19, 2016, 



5 
 

through unauthorized access to an administrative user’s account.   

19. On the same days, Mustapha purchased and sold shares of the same securities as 

the April Victims in his own brokerage account.  Mustapha accessed his own brokerage account 

through a device whose internet protocol (“IP”) address and MAC Address (unique computer 

identifier) matched the IP address and MAC Address he had used on several previous occasions.   

20. Mustapha knowingly caused unauthorized trading activity in the April Victims’ 

accounts that corresponded with his own trading activity. 

21. On April 18, 2016, Mustapha purchased and sold shares of Regulus Therapeutics 

Inc. (“RGLS”) in his own brokerage account and, acting alone or in concert with others, caused 

April Victim No. 1 to purchase and sell RGLS shares.  First, Mustapha caused April Victim No. 

1 to purchase RGLS shares in April Victim No. 1’s account at the New Jersey Broker.  Mustapha 

then sold RGLS shares in his own account.  Mustapha also caused April Victim No. 1’s account 

to sell shares of RGLS that day.  April Victim No. 1 had not previously purchased or sold RGLS 

securities and did not authorize the trades in April Victim No. 1’s account.   

22. On April 18, 2016, Mustapha purchased and sold shares of Yirendai Ltd. 

Sponsored ADR (“YRD”), Cnova N.V. Shares (“CNV”), and/or K12 Inc. (“LRN”) in his own 

brokerage account and, acting alone or in concern with others, caused April Victims No. 1, 2, 3, 

and 4 to purchase and sell YRD, CNV, and/or LRN shares in their respective brokerage 

accounts.  April Victims No. 1, 2, 3, and 4 had not previously purchased or sold these securities 

and did not authorize these trades in their accounts.   

23. On April 19, 2016, Mustapha purchased shares of Applied Optoelectronics, Inc. 

(“AAOI”) in his own account before he, acting alone or in concert with others, caused April 

Victim No. 5 to purchase AAOI shares in April Victim No. 5’s account at the New Jersey 



6 
 

Broker.  Mustapha then sold AAOI shares in his own account on the same day.  April Victim No. 

5 had not previously purchased or sold AAOI securities and did not authorize the trades in April 

Victim No. 5’s account.  

May 2016 Account Intrusions 

24. In or about May 2016, Mustapha, acting alone or in concert with others, hacked 

into the brokerage accounts of at least four additional unwitting United States-based account 

holders (the “May Victims”), who held brokerage accounts at foreign brokerage firms.  These 

foreign brokerage firms used the Platform to give their customers, including the May Victims, 

electronic access to their accounts.     

25. On various dates in May 2016, Mustapha, acting alone or in concert with others, 

caused May Victims No. 1, 2, and 3 to purchase and sell securities of various public companies 

that traded in United States’ markets, including, but not necessarily limited to, Aurus Medical 

Holding AG (“EARS”), Attunity Ltd. (“ATTU”), The Chefs’ Warehouse, Inc. (“CHEF”), Aerie 

Pharmaceuticals, Inc. (“AERI”), Archrock Partners, L.P. (“APLP”), and L.B. Foster Company 

(“FSTR”).  May Victims No. 1, 2, and 3 did not authorize these trades in their accounts.  

Mustapha traded in the shares of each of these companies on the same dates that he caused May 

Victims No. 1, 2, and 3 to trade in them.  

26. On May 17, 2016, Mustapha caused May Victim No. 4, who had not traded any 

securities in his account for several months, to purchase shares of Lawson Products, Inc. 

(“LAWS”) at prices per share that increased during the course of the purchases.  After causing 

May Victim No. 4 to purchase LAWS stock, Mustapha sold LAWS short (i.e., sold stock that he 

did not yet own; short-selling a stock is, in effect, a bet that the stock’s price will decrease) at 

these higher prices.  Then, Mustapha caused May Victim No. 4’s account to sell LAWS stock 



7 
 

until the stock price decreased to approximately its original value.  At or around that time, 

Mustapha began purchasing LAWS stock (to cover his short position) at the lower prices.  

Mustapha made profits from the difference between the price at which he sold LAWS short and 

the price at which he subsequently purchased LAWS shares.     

27. Specifically, at approximately 1:33:26 p.m. ET to 1:34:49 p.m. ET, Mustapha 

caused May Victim No. 4 to purchase LAWS shares at prices that increased from as low as 

$18.99 per share to a high of $19.49 per share.  During that period of trading, the unauthorized 

trading in the May Victim No. 4 account comprised approximately 13,779 shares of the 

approximately 14,379 LAWS shares traded at that time.  At or about that time, Mustapha sold 

short at least 4,200 shares of LAWS stock at $19.49 per share in his own account.  Within 

minutes, Mustapha caused May Victim No. 4’s account to sell LAWS stock as the price declined 

to as low as approximately $18.71 per share.  Then, about one minute later, Mustapha purchased 

LAWS stock at approximately $18.75 per share in his own account, which allowed him to profit 

by purchasing LAWS stock at a lower price per share than the price per share at which he sold 

LAWS stock short.   

28. The trading volume in LAWS stock on May 17 increased dramatically from an 

average daily trading volume that month of approximately 14,000 shares to more than 170,000 

shares.  Mustapha caused May Victim No. 4 to trade more than 120,000 shares of LAWS that 

day.  Through his own brokerage account, Mustapha purchased and sold, or short sold, 

approximately 22,532 shares of LAWS that day.   

29. On May 17, 2016, Mustapha accessed the account of May Victim No. 4 with a 

MAC address identical to the MAC address associated with the device Mustapha used to access 

his own brokerage account on several prior occasions in 2016.  In addition, Mustapha accessed 



8 
 

the account of May Victim No. 4 on May 17, 2016 with an IP address that was an “anonymizer,” 

or an anonymous proxy tool, to mask his true originating IP address.    

30. Mustapha received approximately $12,000 as a result of the LAWS trading, and 

May Victim No. 1 lost approximately $48,000 in account value as a result of that trading. 

31. As a result of the conduct described herein, Mustapha defrauded each of the April 

Victims and May Victims by causing the unauthorized purchase and sale of securities in their 

account. 

32. Mustapha’s unauthorized trading in April and May 2016 negatively affected the 

victimized accounts.  Mustapha caused the victimized accounts to purchase more than $5 million 

(aggregate) of publicly traded stock, and the victims realized aggregate losses of more than 

$200,000.    

33. In addition, between March 2016 and May 2016, Mustapha transferred more than 

$100,000 from his brokerage account to a bank account in his own name.   

34. The current cash balance in Mustapha’s brokerage account at the Clearing Broker 

is approximately $100,000.    

FIRST CLAIM FOR RELIEF 
FRAUD IN THE OFFER OR SALE OF SECURITIES 

(Violations of Section 17(a)(1) and (3) of the Securities Act) 
 

35. Paragraphs 1 through 34 are re-alleged and incorporated by reference. 

36. By reason of the conduct described above, Mustapha, in connection with the offer 

or sale of securities, by the use of the means or instrumentalities of interstate commerce or of the 

mails, directly or indirectly, acting with the requisite degree of knowledge or state of mind 

(i) employed devices, schemes, or artifices to defraud; and (ii) engaged in transactions, practices, 

or courses of business which operated or would operate as a fraud or deceit upon any persons, 



9 
 

including purchasers or sellers of the securities.   

37. By reason of the conduct described above, Mustapha violated Securities Act 

Section 17(a) [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
FRAUD IN CONNECTION WITH THE PURCHASE OR SALE OF SECURITIES  

(Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) 
thereunder) 

 
38. Paragraphs 1 through 34 are re-alleged and incorporated by reference. 

 
39. By reason of the conduct described above, Mustapha, directly or indirectly, in 

connection with the purchase or sale of securities, by the use of the means or instrumentalities of 

interstate commerce or of the mails, or of any facility of any national securities exchange, 

intentionally, knowingly or recklessly, (i) employed devices, schemes, or artifices to defraud; 

and (ii) engaged in acts, practices, or courses of business which operated or would operate as a 

fraud or deceit upon any persons, including purchasers or sellers of the securities. 

40. By reason of the conduct described above, Mustapha violated Exchange Act 

Section 10(b) [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. § 240.10b-5] thereunder. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that this Court: 

A. Temporarily, preliminarily, and permanently restrain and enjoin 

Mustapha, his officers, agents, servants, employees and attorneys, and those persons in 

active concert or participation with him who receive actual notice of the injunction by 

personal service or otherwise, and each of them, from violating Section 17(a) of the 

Securities Act [15 U.S.C. § 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. 

78j(b)], and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5]. 

B. Order Mustapha to disgorge, with prejudgment interest, all ill-gotten gains 



10 
 

obtained by reason of the unlawful conduct alleged in this Complaint; 

C. Order Mustapha to pay civil monetary penalties pursuant to Section 20(d) 

of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 

U.S.C. § 78u(d)(3)]; and 

D. Grant such other and further relief as this Court may deem just and proper. 

JURY DEMAND 

The Commission demands a jury in this matter for all claims so triable. 

 

DATED this 22nd day of June, 2016. 

 

      Respectfully submitted, 

                                           __________________________ 
David Stoelting 
Eric A. Forni* 
Susan Cooke Anderson* 
Martin F. Healey* 
 
U.S. Securities and Exchange Commission 
Boston Regional Office 
33 Arch Street, 24th Floor 
Boston, MA  02110 
(617) 573-8827 (Forni) 
[email protected] 
 
*Not admitted in the S.D.N.Y.