The US Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC) have sued Winston Reed Investments LLC for forex fraud.
Forex Investment Company in trouble
The two regulators filed a federal lawsuit against Winston Reed Investments (WRI) and company VP Mark Pyatt. The lawsuit alleges that Pyatt solicited funds from victims to make investments in commodity and forex pools. He created a Ponzi-like scheme and scammed 19 customers while receiving $200,000 in funds.
The fraudulent scheme was operational between April 2017 and February 2019. Pyatt is not just the vice president but also an investment consultant for the company, also known as Daniel Randolph. He told investors that he is a successful trader while, in reality, he has lost all his money on his personal trades.
They also falsely told their customers that they offer safe investments to users alongside steady and guaranteed returns. The agency also alleges that the pool never generated the kind of returns they promise from trading forex instruments. In reality, he lost nearly all of the funds he got from pool participants.
Pyatt continues touting his expertise
According to the regulators, the WRI and Pyatt continued incurring losses in their trades, but at the same time, they kept users in the dark. They sent their customers’ fraudulent account statements which showed massive profits between 19% and 86% per month. Pyatt initially said that he had made large returns while trading but later said that all the money was lost because his broker-dealer didn’t follow his instructions properly.
The CFTC said that WRI accepts client funds and trades which made them act like Eligible Contract Participants (ECPs). However, they did not have proper registration with the CFTC. The company and its VP spent $150,000 of the investors’ sums on their unrelated personal purchases. The regulators are now looking for full restitution to the defrauded pool investors, disgorgement of the ill-gotten gains and appropriate civil monetary penalties on the defendants.
The regulator also seeks a permanent ban on trading and registration of the defendants as well as a permanent injunction against future violations of the federal commodities laws.