Finra charges discounter to pro athletes with fraudulent sales

The Financial Industry Regulatory Authority Inc. said today that it has filed a complaint against Success Trade Securities Inc., alleging that the online discounter had fraudulently sold more than $18 million in promissory notes to 58 investors, most of them former professional football and basketball players.
Finra claims that the notes, issued by Success Trade Inc., the parent company, promised annual interest rates of 12% to 26%.
In its complaint, which was filed Wednesday, Finra also charged Success Trade Securities’ chief executive, Fuad Ahmed.
Finra claims that proceeds from the note sales were used to make personal unsecured loans to Mr. Ahmed, as well as to pay off past investors and fund the firm’s operations.
Since last November, Finra alleges that Success Trade encouraged note holders to roll over maturing notes at higher rates or take stock in Success Trade.
The firm is in “dire financial condition” and unable to repay principal, Finra alleges, and relies primarily on sales of the notes to keep the firm afloat.
In a cease-and-desist order signed yesterday, Success Trade agreed to stop selling the notes and use assets only for normal business purposes.
Success Trade spokesman Fabian Jarrin said the firm will fight the charges.
“No investors have lost money at this time … and the firm is still operational,” he said.
Washington-based Success Trade is a deep-discount firm, offering stock and options trades for $2.95 to investors who pay a $65 monthly platform fee.