The Securities and Exchange Commission (SEC) has charged Westchester, New York-based investment adviser Michael Scronic with fraud for lying to investors about the value of their investments in a multi-million dollar options trading scheme.
Scronic’s Options Trading Scheme Duped Many
The SEC alleges that Michael Scronic began raising money from at least 42 friends and acquaintances in 2010 purportedly to invest in an options trading. Part of his sales pitch was that he allegedly claimed to have a successful track record trading options. He also allegedly touted the liquidity of the investments, claiming that investors could redeem their money within two business days. But the SEC alleges that Scronic was actually incurring massive trading losses, with at least $15 million in investment losses since April 2010. As of June 30, 2017, Scronic allegedly reported to investors total his fund had total assets of nearly $22 million, but the balance in the brokerage account actually was less than $28,000.
According to the SEC, rather than admit that he was losing money, when certain investors asked for their money, Scronic made multiple excuses why he could not make payments to investors. The SEC also alleges that in other instances Scronic sought to use other investors’ money in a Ponzi-like scheme in order to satisfy redemption requests from other investors. Ponzi schemes are among the oldest and most common forms of investment fraud.
Investors Should Be Aware of Signs of Fraud
Even legitimate options trading can subject investors to the significant risk of loss. When coupled with a dishonest investment advisor, this type of investing can have disastrous results.
While it can be difficult to detect many types of investment fraud, investors should pay attention to warning signs. Investors should beware of any promises of unrealistic high returns or unrealistically consistent returns. Moreover, when investments are made in private placements or private investment funds that have little to no reliable or transparent reporting of information it can be easier for fraudsters to commit wrongdoing.
Did You Lose Money to with Michael Scronic?
If you believe you have been the victim of stockbroker or brokerage firm misconduct, you may have certain legal rights that require your immediate attention.
Call an Investment Fraud Attorney Today
If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered more than $100 million from banks and brokerage firms for their wrongful actions.