April 11 (Reuters) - Wall Street’s industry funded watchdog has charged a Washington, D.C.-based online brokerage with civil fraud for selling investments in promissory notes to 58 investors, including many current and former professional basketball and football players, the regulator announced Thursday.
The Financial Industry Regulatory Authority (FINRA) also ordered the firm, Success Trade Securities Inc, and its chief executive, Fuad Ahmed, to temporarily stop selling the notes and refrain from other alleged activities because the investors are at risk of losing their money, according to a regulatory document. The firm and Ahmed agreed to the order.
FINRA, in a civil complaint, alleged that Ahmed and Success Trade Securities misrepresented to the athletes and other investors that they were raising $5 million through the sale of promissory notes, even as the sales exceeded the original offering by more than 300 percent.
Most of the notes promised to pay an annual interest rate of 12.5 percent on a monthly basis over three years, with some notes promising to pay interest as high as 26 percent, FINRA said.
Success Trade Securities and Ahmed did not immediately return a call requesting comment.