A Long Island man used software to manipulate trading and prevent investors from withdrawing their funds as part of a $4 million binary options fraud, the SEC said Dec. 3.
Mark Suleymanov ran several websites to entice investors into buying his unregistered binary options and manipulated trading results to increase their losses, according to a Securities and Exchange Commission complaint. The agency has already submitted a proposed consent judgment for court approval.
One of the websites promised “Up to 88% Return,” the complaint said, quoting the site. However, Suleymanov’s trading model was rigged against investors: losing trades cost investors 100 percent of the trade amount, while winning trades netted investors only 70 to 80 percent of the trade amount, the SEC said. Each account “would cumulatively lose value the more it was traded,” assuming the investor won about half the time, according to the agency.
Suleymanov used software “to give new customers high rates of winning trades initially to encourage them to invest more funds,” the complaint said. He used this program to “lure customers in for the first time, get them to deposit as much as possible, let them win,” the SEC said, quoting one of Suleymanov’s emails to his software provider.
Once the investors were on board, the software would make them start losing more often. “This is not our first day at the park with this,” Suleymanov said in the reproduced email.
Mortgage Payments, Nasdaq Fake
One website also falsely promised that investor funds “would be held in a segregated account and used only for trading options,” not the company’s business expenses, the SEC said. But Suleymanov actually commingled investor funds in bank accounts he controlled, according to the agency. He used the accounts for both business and personal expenses, including mortgage payments, the complaint said.
Suleymanov also used a Nasdaq logo on one of the websites, even though his options weren’t traded on Nasdaq “or any other regulated exchange,” according to the complaint.
He agreed to a permanent injunction, according to a Dec. 3 SEC letter. Suleymanov also agreed to disgorgement and a civil fine, which the court could set at a later date, the letter said.
Suleymanov didn’t admit or deny wrongdoing, according to the proposed consent judgment filed Dec. 3. His attorney, Albert Y. Dayan of Kew Gardens, N.Y., didn’t immediately respond to a request for comment.
The case is SEC v. Suleymanov, E.D.N.Y., No. 2:18-cv-06854, complaint filed 12/3/18.