SEC v. Firas A. Hamdan; and FAH Capital Partners, No. LR-22603, Southern District of Texas (Jan. 29, 2013) — Press Release
raw: Firas A. Hamdan, individually and doing business as FAH Capital Partners
Firas A. Hamdan, individually and doing business as FAH Capital Partners, No. 4:13-CV-215 (Jan. 29, 2013)
Firas A. Hamdan, a Houston-area day trader, defrauded at least 33 investors, primarily from the Lebanese and Druze communities, out of over $6 million through a fake high-frequency trading scheme, generating $1.5 million in losses.
Firas A. Hamdan, a day trader in Sugar Land, Texas, allegedly defrauded at least 33 investors, primarily from the Houston-area Lebanese and Druze communities, out of more than $6 million over a five-year period. Hamdan promised annual returns of 30% through a supposed high-frequency trading program, but instead generated $1.5 million in losses, which he hid by providing falsified brokerage records. The SEC is seeking a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains, and financial penalties.
Firas A. Hamdan, a Houston-area day trader and former treasurer of the American Druze Society, was charged by the U.S. Securities and Exchange Commission (SEC) with defrauding at least 33 investors, primarily from the Lebanese and Druze communities, out of over $6 million through a fake high-frequency trading scheme. Hamdan falsely claimed to use a proprietary algorithm to generate 30% annual returns, providing forged brokerage statements that inflated account balances from under $30,000 to over $5 million, while concealing $1.5 million in actual trading losses. He fabricated excuses for poor performance, including false claims about Greek debt and MF Global losses, and lied about secured cash reserves, a $5 million “key-man” insurance policy, and a fictitious $1 million investment by a Dallas hedge-fund manager. The SEC alleges violations of Section 17(a) of the Securities Act and Section 10(b) and Rule 10b-5 of the Securities Exchange Act. Hamdan targeted fellow members of the Houston-area Lebanese and Druze communities, raising funds through word of mouth and existing investors. The SEC is seeking injunctive relief, disgorgement of ill-gotten gains with interest, and financial penalties. Hamdan's scheme lasted for over five years, from 2007 to 2012, during which he misrepresented his trading success to investors.
Exhibits & Attached Documents (1)
Extracted insights
- $6.00M $6 million $1M–$10M
- $5.10M $5.1 million $1M–$10M
- $5.00M $5 million $1M–$10M
- $2.70M $2.7 million $1M–$10M
- $2.30M $2.3 million $1M–$10M
- $1.50M $1.5 million $1M–$10M
- $148K $148,210 $100K–$1M
- $28K $27,970 $10K–$100K
- $7K $7,452 <$10K
- agency Securities and Exchange Commission
- organization Securities and Exchange Commission
- Securities and Exchange Commission charged Firas A. Hamdan, individually and doing business as FAH Capital Partners, with defrauding investors in a Houston-area investment scheme targeting Lebanese and Druze communities
- Securities and Exchange Commission sued to halt an investment scheme operated by Firas A. Hamdan targeting Lebanese and Druze communities
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 22603 / January 29, 2013 Securities and Exchange Commission v. Firas A. Hamdan, individually and doing business as FAH Capital Partners, Civil Action No. 4:13-CV-215 (Southern District of Texas filed January 28, 2013) SEC SUES TO HALT HOUSTON-AREA INVESTMENT SCHEME TARGETING LEBANESE AND DRUZE COMMUNITIES The Securities and Exchange Commission today charged a day trader in Sugar Land, Texas, with defrauding investors in his supposed high-frequency trading program and providing them falsified brokerage records that drastically overstated assets and hid his massive trading losses. The SEC alleges that Firas Hamdan particularly targeted fellow members of the Houston-area Lebanese and Druze communities, raising more than $6 million over a five-year period from at least 33 investors. Hamdan told prospective investors that he would pool their investments with his own money and conduct high-frequency trading using a supposed proprietary trading algorithm. Hamdan promised annual returns of 30 percent and assured investors that his program was safe and proven when in reality it was a dismal failure, generating $1.5 million in losses. As he failed to deliver the promised profits, Hamdan told investors that his funds were tied up in the Greek debt crisis and the MF Global bankruptcy among other phony excuses. According to the SEC's complaint filed in federal court in Houston, Hamdan is well-known in the Lebanese and Druze communities in the Houston area and is a former treasurer of the Houston branch of the American Druze Society. Hamdan found investors for his trading program by talking with his friends and family in these communities. As word spread about his purported trading success, he asked existing investors to solicit their friends for investments. The SEC alleges that Hamdan misrepresented to investors that he generated positive returns in 59 of 60 months between 2007 and 2012. He showed them phony documentation to support his false claims. For instance, a purported brokerage statement he provided investors for the first quarter of 2010 showed an opening balance of more than $2.3 million with quarterly trading gains of $2.7 million for a closing balance above $5.1 million. An actual brokerage statement obtained by SEC investigators for Hamdan's account during that same period shows the opening balance at just $27,970.76 and the closing balance at $148,210.02, with quarterly trading losses of $7,452.80. According to the SEC's complaint, Hamdan made several other false claims to potential investors. For instance, he lied about the existence of a cash reserve account that secured their investments. Hamdan falsely stated that investments were further secured by a $5 million "key-man" insurance policy. He also falsely claimed that a well-known hedge-fund manager in the Dallas area had made a million-dollar investment with him and promised to invest more based on Hamdan's continuing success. The SEC's complaint charges Hamdan with violating Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking various relief including a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. SEC Complaint
U.S. SECURITIES AND EXCHANGE COMMISSION Litigation Release No. 22603 / January 29, 2013 Securities and Exchange Commission v. Firas A. Hamdan, individually and doing business as FAH Capital Partners, Civil Action No. 4:13-CV-215 (Southern District of Texas filed January 28, 2013) SEC SUES TO HALT HOUSTON-AREA INVESTMENT SCHEME TARGETING LEBANESE AND DRUZE COMMUNITIES The Securities and Exchange Commission today charged a day trader in Sugar Land, Texas, with defrauding investors in his supposed high-frequency trading program and providing them falsified brokerage records that drastically overstated assets and hid his massive trading losses. The SEC alleges that Firas Hamdan particularly targeted fellow members of the Houston-area Lebanese and Druze communities, raising more than $6 million over a five-year period from at least 33 investors. Hamdan told prospective investors that he would pool their investments with his own money and conduct high-frequency trading using a supposed proprietary trading algorithm. Hamdan promised annual returns of 30 percent and assured investors that his program was safe and proven when in reality it was a dismal failure, generating $1.5 million in losses. As he failed to deliver the promised profits, Hamdan told investors that his funds were tied up in the Greek debt crisis and the MF Global bankruptcy among other phony excuses. According to the SEC's complaint filed in federal court in Houston, Hamdan is well-known in the Lebanese and Druze communities in the Houston area and is a former treasurer of the Houston branch of the American Druze Society. Hamdan found investors for his trading program by talking with his friends and family in these communities. As word spread about his purported trading success, he asked existing investors to solicit their friends for investments. The SEC alleges that Hamdan misrepresented to investors that he generated positive returns in 59 of 60 months between 2007 and 2012. He showed them phony documentation to support his false claims. For instance, a purported brokerage statement he provided investors for the first quarter of 2010 showed an opening balance of more than $2.3 million with quarterly trading gains of $2.7 million for a closing balance above $5.1 million. An actual brokerage statement obtained by SEC investigators for Hamdan's account during that same period shows the opening balance at just $27,970.76 and the closing balance at $148,210.02, with quarterly trading losses of $7,452.80. According to the SEC's complaint, Hamdan made several other false claims to potential investors. For instance, he lied about the existence of a cash reserve account that secured their investments. Hamdan falsely stated that investments were further secured by a $5 million "key-man" insurance policy. He also falsely claimed that a well-known hedge-fund manager in the Dallas area had made a million-dollar investment with him and promised to invest more based on Hamdan's continuing success. The SEC's complaint charges Hamdan with violating Section 17(a) of the Securities Act of 1933, Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking various relief including a temporary restraining order, preliminary and permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. SEC Complaint