SEC brings fraud charges against Worldwide Markets
Worldwide Markets, which sold its customers single-security CFDs, has not honored a single customer withdrawal request since 2017.
The United States Securities and Exchange Commission (SEC) has brought fraud charges against Worldwide Markets, Ltd., registered in the British Virgin Islands, and its CEO, Thomas Plaut.
The charges stem from the defendants’ fraudulent marketing and other deceptive conduct in connection with the unlawful sale of security-based swaps to foreign retail investors. The SEC complaint also charges a New Jersey-based company, TAB Networks, with aiding and abetting the broker’s unlawful offerings and sales of security-based swaps to retail investors, and its failure to register as a broker in the United States.
According to the SEC’s complaint, Worldwide Markets and Plaut solicited foreign investors with offers to “own and trade” U.S. stocks. The complaint further alleges that customers were offered “quick and easy” account opening and promised that any withdrawal requests would be processed within two business days. However, instead of providing its customers with stocks, Worldwide Markets – at Plaut’s direction – sold its customers single-security CFDs.
Worldwide Markets is said to have furthered its fraudulent scheme by improperly misappropriating at least $400,000 of customer deposits. The firm used the customer deposits for undisclosed purposes such as financing other business lines and reimbursing employee expenses. Despite its representations that customer withdrawals would be processed within two business days, Worldwide Markets allegedly has not honored a single customer withdrawal request since 2017. In addition, the SEC alleges that Worldwide Markets failed to register its security-based swap offerings and sales, transact its security-based swaps on a registered national exchange, and register as a broker as required by the federal securities laws.
The SEC’s complaint, filed in U.S. District Court for the District of New Jersey, charges Worldwide Markets with violating the antifraud provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and various registration provisions, including Section 5(e) of the Securities Act, and Sections 6(l) and 15(a) of the Exchange Act.
The SEC also charged Plaut with liability for Worldwide Markets’ violations based on his role as a control person; and alleged that Worldwide Markets’ violations of the registration provisions were aided and abetted by TAB Networks, Inc., a New Jersey-based company controlled by Plaut that performed nearly all of Worldwide Markets’ operations.
The regulator is seeking permanent injunctions, disgorgement plus interest, and penalties.