Court signs consent judgment in SEC’s case against Ponzi scammer targeting college kids

Maria Nikolova

Syed Arham Arbab, who ran a purported hedge fund, is permanently restrained from engaging in any act, practice, or course of business which operates as a fraud or deceit.

The Georgia Middle District has signed a consent order in the action brought by the Securities and Exchange Commission (SEC) against Syed Arham Arbab, a former student at the University of Georgia. As FinanceFeeds reported in June 2019, Arbab and two entities under his operation and control – Artis Proficio Capital Investments, LLC (APCI) and Artis Proficio Capital Management, LLC (APCM), are accused of fraud.

According to the SEC’s complaint, between at least May 2018 and as recently as May 17, 2019, Arbab, acting individually or through APCI and APCM, offered and sold investments in a purported hedge fund, called Artis Proficio Capital. He promised very high rates of return, and sent investors account updates purporting to substantiate those claims. Arbab also offered and sold certain “bond agreements,” which function like promissory notes.

Arbab described himself as the Fund’s “Partner” and “Chief Investment and Financial Officer.” Arbab is not registered with the Commission in any capacity.

In May 2018, Arbab began soliciting investors for investments in the Fund, which he told investors he managed and controlled. He represented to investors that he had already finished his undergraduate degree and was working on a master’s degree in business administration (MBA) from UGA. In reality, Arbab did not receive an undergraduate degree from UGA until May 2019, which was in cellular biology and genetics. He has never been enrolled in UGA’s MBA program.

In text messages and emails to investors and potential investors, Arbab made multiple representations about the Fund, including that:

  • his “firm” was “different because we target young investors/college kids;”
  • money invested in the Fund was “GUARANTEED and backed up to 15,000$;”
  • the Fund had earned annual returns that he variously described as ranging between 22 to 56 percent;
  • the Fund would have lower costs than most other hedge funds because Arbab would not take any percentage of the initial investment and would only take “15% off [an investor’s] capital gains after calculating taxes;”
  • investors could withdraw their money with two weeks advance notice.

Contrary to Arbab’s claims, the Fund never existed, and, upon information and belief, there is no brokerage account existing in the name of the Fund, APCI, or APCM.

As per the consent judgment, seen by FinanceFeeds, Arbab is permanently restrained and enjoined from violating, directly or indirectly, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security:

  • (a) to employ any device, scheme, or artifice to defraud;
  • (b) to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or
  • (c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

The defendant is also permanently restrained and enjoined from violating Section 17(a) of the Securities Act of 1933 in the offer or sale of any security by the use of any means or instruments of transportation or communication in interstate commerce or by use of the mails, directly or indirectly:

  • (a) to employ any device, scheme, or artifice to defraud;
  • (b) to obtain money or property by means of any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or
  • (c) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser.

Furthermore, Arbab is permanently restrained and enjoined from violating directly or indirectly, Section 206(4) of the Advisers Act and Rule 206(4)-7, while acting as an investment adviser, by use of the mails, or any means or instrumentality of interstate commerce, directly or indirectly to engage in any act, practice or course of business which is fraudulent, deceptive, or manipulative, including:

  • (a) failing to adopt and implement written policies and procedures reasonably designed to prevent violations, by the investment adviser and its supervised persons, of the Advisers Act and the rules that the Commission has adopted under the Advisers Act;
  • (b) failing to review, no less frequently than annually, the adequacy of the policies and procedures established and the effectiveness of their implementation; and
  • (c) failing to designate an individual (who is a supervised person) responsible for administering the written policies and procedures that the investment adviser adopted pursuant to Rule 206(4)-7.

Finally, the order envisages that Arbab will have to pay disgorgement of ill-gotten gains, prejudgment interest thereon, and a civil penalty. The Court will determine the amounts of the disgorgement and civil penalty upon motion of the Commission.

Read this next

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

Digital Assets

BlockDAG’s Presale Hits $9.9M, MultiversX & MINA Price Predictions Show Green

Read about BlockDAG’s promising $10 prediction and insights on MultiversX Price Prediction as MINA’s potential unfolds.

Digital Assets

Rockstar Co-Founder and All-star Line Up Join Advisory Board to Take Metacade into Post Beta Orbit

Metacade, the revolutionary Web3 gaming platform, prepares to streak out of beta with a slew of ground-breaking initiatives that will redefine the way blockchain games are developed.

Retail FX

Prop firm The Funded Trader shuts down, claims relaunch in April

Prop trading firm The Funded Trader has ceased all operations, with claims for a relaunch in the near future.

Digital Assets

Ethereum-Based Tokenized Real Estate Platform USP Launches On Republic

How This Californian Startup Is Revolutionizing Real Estate Investment through Ethereum-Based Tokenization.

Digital Assets

Sui Spikes in Weekly DEX Volume, Joins Top 10 of All Blockchains

March DEX volume on Sui stands at over $2.88B – up more than 49% from February – with decentralized exchange Cetus and wholesale liquidity layer DeepBook leading.

Digital Assets

Prisma Finance suffers $10 million crypto exploit, attack ongoing

Liquid staking protocol Prisma Finance fell victim to a security exploit on March 28, resulting in nearly $10 million in Prisma mkUSD and wrapped stETH being stolen by hackers.

Digital Assets

Masa and LayerZero: Bridging Blockchains for Data Sovereignty

Masa Network is poised to revolutionize the personal data landscape with its upcoming launch as a cross-chain platform, making it accessible on a variety of blockchains right from the start.

<