UNREGISTERED ADVISOR CHARGED WITH FRAUD

The following excerpt is from the SEC website: September 27, 2011 “On September 27, 2011, the Securities and Exchange Commission filed a civil injunctive action against Shreyans Desai and ShreySiddh Capital, LLC (SSC) in the United States District Court for the District of New Jersey. The Commission's complaint alleges fraudulent conduct by Desai in connection with the purchase and sale of securities for individuals who provided Desai with more than $245,000 to invest on their behalf. According to the complaint, from April 2009 to February 2011, Desai, acting through SSC, an unregistered investment adviser founded by Desai, made numerous materially false and misleading statements to potential investors, including that SSC was a securities broker registered with the Commission and that potential investors would receive returns of at least 50% if they invested their money with SSC. Desai also guaranteed to investors that he would not lose their money. On the basis of Desai's misrepresentations, five individuals gave Desai money to invest on their behalf through SSC. Desai then misappropriated investor money, using it to, among other things, make donations to a local religious institution and pay the personal debts and expenses of Desai's family members. Desai also lost investor money through bad trades. To hide the fact that Desai had misappropriated or lost investor money, Desai provided SSC investors with account statements that overstated the value of the investors' accounts by as much as 300%. According to the Commission's complaint, Desai and SSC also acted as securities brokers by engaging in the regular business of effecting transactions in securities for the accounts of others and by holding themselves out as securities brokers that were registered with the Commission. At the time, however, neither Desai nor SSC was registered with the Commission as a broker and neither was associated with a registered broker-dealer. The Commission's complaint charges Desai and SSC with violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission is seeking permanent injunctive relief, civil penalties and disgorgement against Desai and SSC.”