SEC files emergency action against Winston Reed Investments

Maria Nikolova

The company and its principal allegedly raised money from dozens of investors based on promises of exorbitant returns and then misappropriated investor funds.

The United States Securities and Exchange Commission (SEC) today announces that it has filed an emergency action and obtained a temporary restraining order and asset freeze against a purported investment firm and its principal who allegedly raised money from dozens of investors based on false promises of high returns and then misappropriated over $150,000 of investor funds.

The SEC’s Complaint targets Winston Reed Investments, its control person Mark Nicholas Pyatt, and names Daniel Gregory Randolph as relief defendant.

Winston Reed Investments L.L.C. Is a North Dakota limited liability company formed by Pyatt in April 2017. Mark Nicholas Pyatt was listed on documents provided to investors as the vice president of and investment consultant for Winston Reed.

According to the SEC’s complaint, beginning in April 2017, Winston Reed Investments LLC and Mark N. Pyatt raised hundreds of thousands of dollars from retail investors by representing they would use a sophisticated trading strategy to trade in futures contracts, foreign exchange, and stocks. Instead, Pyatt allegedly used the vast majority of investor money for personal items, including vehicles, jewelry, groceries, and cigars. Winston Reed and Pyatt also allegedly used a portion of new investor money to make payments to other investors.

To further conceal their fraud, in February 2019, shortly before the initial investors were eligible to withdraw funds due to a purported 24 month lock-up period, the defendants told investors that “a complete and catastrophic loss” had occurred that prevented Winston Reed from returning any funds. Pyatt falsely told investors that the cause of this “catastrophic loss” was the alleged failure of Winston Reed’s brokerage firm to implement a trading instruction properly. In truth, Pyatt could not repay investors because he had already misappropriated the majority of investors’ funds.

According to the SEC’s Complaint, Pyatt is continuing his efforts to defraud investors, by among other things, telling them of his intention to restart his trading group using a new trading platform.

The complaint charges Winston Reed and Pyatt 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 SEC seeks emergency relief, as well as permanent injunctions, disgorgement of allegedly ill-gotten gains with prejudgment interest, and a civil penalty.

The complaint also seeks disgorgement of allegedly ill-gotten gains with prejudgment interest from a relief defendant, Daniel G. Randolph. Randolph was listed on documents provided to investors as the president and owner of Winston Reed. Winston Reed and Pyatt transferred to Relief Defendant Daniel Gregory Randolph approximately $23,787 in investors’ funds that originated from the fraud. Randolph provided no consideration in exchange for these funds and he has no legitimate claim to the money that he received.

The complaint was filed at the Court for the Western District of North Carolina.

Read this next

Institutional FX

Fiserv secures major payment institution licence in Singapore

Brookfield-based financial services technology provider Fiserv Inc has obtained nod for a Major Payment Institution license in Singapore.

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.

Opinion

It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

Technology

Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

<