SEC bars ex-owner of Forex firm Boston Trading and Research from association with any broker/dealer
SEC settles administrative proceedings against Craig Karlis, who, back in 2014, got a prison term for Forex fraud.
The name of Craig Karlis made the headlines in 2014 when he got a prison sentence of 108 months and was ordered to pay $4.37 million in restitution to investors he defrauded via Boston Trading and Research, LLC (BTR). Whereas the criminal proceedings against Mr Karlis, who was BTR’s managing director and one of its three owners from 2007 to August 2008, concluded back in 2014, the civil actions and regulatory investigations into his activities while at BTR have continued.
On Friday, February 2, 2018, the United States Securities and Exchange Commission (SEC) issued an order instituting settled administrative proceedings against Mr Karlis. The order, to which Karlis consented without admitting or denying the SEC’s findings, permanently bars him from associating with any broker or dealer pursuant to Section 15(b)(6) of the Exchange Act.
The settlement of the administrative proceedings is announced after in December 2017 a final judgment was entered by consent against Mr Karlis, permanently enjoining him from future violations of the Securities Act of 1933 and of the Exchange Act and Rule 10b-5, in the civil action entitled Securities and Exchange Commission v. Boston Trading and Research, LLC, et al., Civil Action Number 10-cv-11841, in the United States District Court for the District of Massachusetts.
Let’s recall that Massachusetts-based Boston Trading and Research, LLC offered its clients to invest money to be traded in foreign currency, with the minimum investment usually at $10,000. Investors deposited money with the company with an expectation that profits would be produced by the efforts of BTR. Investor funds were pooled for the purposes of trading in foreign currency. Mr Karlis solicited investors on behalf of BTR through marketing materials, presentations, BTR’s website, and salespeople.
The SEC’s complaint alleged that in connection with the sale of BTR’s securities, Mr Karlis misappropriated investor money for his own personal purposes and that BTR traded investor money without full disclosure to investors, and in ways inconsistent with BTR’s representations to investors. The Commission has also alleged that Mr Karlis effected transactions in, or induced or attempted to induce the purchase or sale of, securities, without being registered as a broker or dealer in accordance with Section 15(b) of the Exchange Act.
On March 7, 2014, Mr Karlis pled guilty to nine counts of wire fraud and two counts of filing false tax documents before the United States District Court for the District of Massachusetts and a judgment was entered against him.
The nine counts of wire fraud of the indictment to which he pled guilty alleged, among other things, that Mr Karlis defrauded investors and obtained money and property by means of materially false and misleading statements, and that he used interstate wires in furtherance of the fraud. Regarding the tax fraud, the Commission found that, inter alia, Mr Karlis failed to report a $600,000 house that he had paid for, in cash, with BTR investor money.
