SEC brings charges against Jared Jeffrey Davis over binary options fraud

The United States Securities and Exchange Commission (SEC) today announces that it has charged Jared Jeffrey Davis and his business partner Dale Burke Pinchot with defrauding investors in connection with an unregistered binary options business.

According to the SEC’s complaint, Davis and Pinchot engaged in the fraudulent offer and sale of unregistered binary options under the brand names OptionMint, OptionKing, Option Queen, and OptionPrince. The complaint further alleges that Davis misrepresented the number of investors who successfully traded binary options and failed to disclose that, to be successful, an investor would need to win an unlikely high percentage of trades.

Davis, Pinchot, and their companies are said to have effectively took the opposing position on each trade and therefore made money when customers entered into losing binary options trades. The complaint also alleges that Davis failed to inform investors that he frequently manipulated the options trading software to increase the odds of investor losses.

The SEC’s complaint charges Davis 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 thereunder, the registration provisions of Sections 5(a) and 5(c) of the Securities Act, and the broker-dealer registration provisions of Section 15(a)(1) of the Exchange Act and charges Pinchot with violating antifraud provision Section 17(a)(2) of the Securities Act.

Without admitting or denying the SEC’s allegations, the defendants consented to the entry of judgments that permanently enjoin them from violating the above-mentioned provisions of the federal securities laws, and from participating in the issuance, purchase, offer, sale, or promotion of any binary option security. The final judgments provide that the court will determine disgorgement and civil penalties at a later date. The settlement is subject to court approval.

The U.S. Attorney’s Office for the Northern District of Ohio announced criminal charges against Davis in June this year. Under the criminal indictment, Davis and others ran a fraudulent binary options investment scheme between 2012 and 2016 through Erie Marketing LLC, headquartered in Sandusky, where Davis was involved in various real estate ventures and businesses. The options business used various trade names, including OptionMint, OptionKing and OptionQueen. Davis’ binary options businesses were not registered with the Securities and Exchange Commission nor the Commodity Futures Trading Commission, the Department of Justice explained.