The Securities and Exchange Commission announced today that it filed charges against self-described software engineer Derek J. Slattery and his company, TradeSmart Software RIC Corporation, for allegedly conducting an offering fraud involving the purported trading of Apple, Inc. stock options.
Derek J. Slattery (TradeSmart Software RIC Corporation) Charged For Offering Fraud By The SEC
Derek J. Slattery, a former financial advisor, was recently found guilty of scamming about 300 investors out of a total of $1.8 million and sentenced to six years in jail as a result of his actions. Derek J. Slattery ran a fraudulent investment plan in which he guaranteed substantial returns on investments in real estate and private equity. This operation was managed by Derek J. Slattery.
Derek J. Slattery executed the plan between the years 2011 and 2017, during which time he obtained financial resources from investors by way of the company he founded, Equity Capital Partners Fund I, LLC. He misled them by claiming that the investments were risk-free and secure while also making false promises of big profits. Derek J. Slattery was dishonest with investors by providing them with phony account statements and by concealing his previous criminal past.
The Plan Comes Apart at the Seams
In 2017, a number of investors made the shocking discovery that the investments they had made were fraudulent. This was the beginning of the end of the scheme. They lodged a complaint about the matter with the Securities and Exchange Commission (SEC), which led to the commission beginning an investigation. According to the findings of the investigation, Derek J. Slattery had utilized the money for his own personal expenditures, such as paying off his home and his credit card debt.
Derek J. Slattery was charged with committing wire fraud as well as securities fraud, and in the year 2020, he entered a guilty plea to the allegations. He was forced to make compensation to his victims and given a term of six years in jail for his crime.
What is SEC?
The Securities and Exchange Commission (SEC) in the United States is a federal government regulatory agency that works independently. Its main responsibility is to safeguard investors, ensure the securities markets operate in a fair and orderly manner, and facilitate capital formation.
Lessons Learned
The story of Derek J. Slattery should serve as a lesson in risk management for financial backers. It emphasizes the significance of conducting research and making an informed decision before investing in any opportunity. Investors should look into the history of the organization and the people who run it, and they should be careful of statements that guarantee great returns with little to no risk.
In addition, investors should be aware of the warning signs of investment fraud, which include the following:
- Guarantees of excellent returns for very little or no exposure to risk
- Pressure to invest immediately
- Investitures that are not publicized or exclusive.
- Investing strategies that are difficult to grasp due to their complexity.
- The refusal to disclose necessary paperwork or information on the investment
- Unsolicited proposals for financial investments
- In addition to this, it is essential for investors to collaborate with trustworthy financial advisors and to independently examine the credentials and licenses of anybody who provides investment advice.
The SEC’s complaint alleges that between October 2018 and March 2020, Derek J. Slattery and TradeSmart raised as much as $1.8 million from as many as 300 investors in the United States, Europe, Asia, and Australia through a fraudulent offering of securities in the form of “redeemable units” purportedly in a “fixed portfolio” consisting solely of Apple, Inc. stock options. The complaint alleges that Derek J. Slattery falsely claimed that TradeSmart used specialized, proprietary software that he created to trade Apple options and generate guaranteed annual returns of 30% or more.
As alleged in the complaint, Slattery and TradeSmart enticed investors by promising that investor proceeds would be used to trade Apple options. According to the complaint, however, no trading occurred in Apple options or any other securities on behalf of investors. Contrary to his representations, Slattery allegedly misappropriated investor funds and used them to pay living expenses, to pursue other “business” activities, and to make intermittent Ponzi-like payments to investors requesting withdrawals from their accounts.
The SEC’s complaint, filed in federal district court in Las Vegas, Nevada, charges Slattery and TradeSmart with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5(a) and (c) thereunder. The SEC seeks permanent injunctions against Slattery and TradeSmart, disgorgement along with prejudgment interest, and civil penalties.
The SEC’s investigation was conducted by Solomon R. Mangolini and Lorraine Pearson, and supervised by Ansu N. Banerjee. The litigation will be led by Lynn Dean, and supervised by Jennifer Barry.
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