SEC charges Worldwide Markets with fraud

US SEC charges Worldwide Markets with fraud along with the CEO. This brokerage firm has allegedly tricked foreign retail investors into buying unregistered security-based swaps through false marketing. 

June 26, 2019 | AtoZ Markets - The US Securities and Exchange Commission (SEC) has brought fraud charges against Worldwide Markets, Ltd., registered in the British Virgin Islands, and the company’s CEO Thomas Plaut. 

Worldwide Markets case in a brief

SEC charges Worldwide Markets with fraud and misappropriation of at least $ 400,000 in customer deposits. According to the U.S. SEC complaint, the regulator accuses the company of fraudulent marketing activity and other actions related to the illegal sale of swaps based on providing foreign retail investors. 

The U.S. authority’s complaint alleges, that Worldwide Markets lured foreign investors into their scheme by offering to “own and trade” US stocks.

The authority states that customers were offered a “quick and easy” account opening, and Worldwide Markets promised that any withdrawal requests would be processed within two business days. However, as the U.S. SEC states, instead of providing shares to its customers, Worldwide Markets - on its CEO Thomas Plaut orders - sold single-security CFDs to its customers.

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The company used misappropriated funds in its fraudulent scheme

According to the SEC complaint, Worldwide Markets used its clients’ deposits for undisclosed purposes, such as financing other business lines and reimbursing employees. Despite promises that withdrawals from customers will be processed within two business days, Worldwide Markets has allegedly not satisfied any withdrawal requests since 2017.

In addition, the SEC claims that firm was unable to register its offers for swaps and security-based sales, securities-based swaps on the registered national stock exchange and registration as a broker in accordance with federal securities laws.

The regulator also accuses TAB Networks, a company based in New Jersey,  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.

TAB Networks which is controlled by Thomas Plaut performed nearly all of Worldwide Markets’ operations. 

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.

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