Magistrate Judge recommends penalty of $1.54m for FX & Beyond Corporation
Magistrate Judge Ivan D. Davis recommends the entry of default judgement in favor of the Securities and Exchange Commission against Steve H. Karroum, his wife and FX & Beyond Corporation.
Magistrate Judge Ivan D. Davis of the Virginia Eastern District Court has sided with the United States Securities and Exchange Commission (SEC) with regard to the regulatory motion to issue a default judgement against Steve H. Karroum, his wife – Sahar Karroum, and FX & Beyond Corporation.
On Friday, February 2, 2018, the Magistrate Judge issued a Report and Recommendations as to the SEC’s Motion. In the document, seen by FinanceFeeds, the Judge recommends the entry of default judgement in favor of the Securities and Exchange Commission against Steve H. Karroum, his wife – Sahar Karroum, and FX & Beyond Corporation. The SEC is entitled to damages in the total amount of $1,537,290, which comprises disgorgement, prejudgment interest, and a civil monetary penalty. The Magistrate Judge further recommends that Defendants be enjoined from further violating the Securities Act and the Exchange Act.
Defendant Steve H. Karroum was the President of FX & Beyond Corporation and controlled FX & Beyond. He has claimed to have created a computerized foreign exchange platform that conducted forex trades without loss. FX & Beyond was incorporated in Virginia but its corporate status was terminated on February 29, 2016, due to failure to pay annual fees and file annual reports.
Ms Karroum is not alleged to have violated the Securities Act or the Exchange Act but is a part of the suit as a “nominal defendant” from whom the SEC may recover for Defendants’ violations. Ms Karroum received at least $335,000 in transfers from FX & Beyond’s bank account.
From December 2007 through May 2014, Mr Karroum solicited approximately $4 million from 18 investors for himself and on behalf of his company to be used for Forex trading. He failed to register the investment offerings with the SEC as required. He also failed to invest the funds in Forex trading. Instead, he deposited the funds in FX & Beyond’s account and misappropriated investor funds for his and his wife’s personal use or benefit. Mr Karroum further misled investors by providing materially false or misleading account statements purporting to show profits from Forex trading.
The case is captioned Securities and Exchange Commission v. Karroum et al (1:17-cv-00187).