Compliance Corner: SEC Charges Advisor Over Alleged Ponzi-Like Scam

Editorial Staff

6 October 2017

only in publicly traded options and cash so any redemptions are met within two business days so if you do need to withdraw for your business needs it will be quick and painless."

In fact, Scronic was actually sustaining massive trading losses, with at least $15 million in investment losses since April 2010, the SEC claims. For the period ending June 30, 2017, Scronic allegedly reported to investors total assets of at least $21,837,475 while the balance in his brokerage account on June 30, 2017 was just under $27,500.

When some people tried to redeem investments, Scronic did not say he could not repay them. Rather, he allegedly provided investors with a steady stream of implausible excuses for why he could not pay them back. In other cases, he tried to obtain additional investment funds from new and existing investors so that he could pay other investors.

"Scronic's alleged scheme is just another example of a so-called investment professional acting as fiduciary, but failing to deal honestly with his investors for his own financial benefit," said Lara S Mehraban, Associate Regional Director of the SEC's New York Regional Office. "Investors should be wary anytime they are promised high or consistently positive returns in a complex, hard to understand investment strategy,” she said.

The SEC also alleges that Scronic began identifying himself as an investment adviser to a fictitious hedge fund in which he purported to sell interests, or "shares."

In a parallel action, the US Attorney's Office for the Southern District of New York today announced criminal charges against Scronic.