U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23169 / December 23, 2014
Securities and Exchange Commission v. Efstratios "Elias" D. Argyropoulos and Prima Capital Group, Inc., Civil Action No. 2:14-cv-09800 (C.D. Cal.)
SEC Charges Stock Promoter with Fraudulent Scheme Related to Pre-IPO Facebook and Twitter Shares
On December 23, 2014, the Securities and Exchange Commission charged a stock promoter based in Santa Barbara, Calif., with fraudulently raising nearly $3.5 million from investors purportedly to purchase Facebook and Twitter shares prior to their initial public offerings (IPOs).
The SEC alleges that instead of purchasing the shares in the secondary market as promised, Efstratios "Elias" Argyropoulos and his firm Prima Capital Group misappropriated investor funds. They used the money primarily for day trading of stocks and options as well as to pay off certain investors who complained when they didn't receive the promised Facebook or Twitter shares.
Argyropoulos and Prima Capital agreed to settle the SEC's charges and to be barred from working for an investment adviser or broker-dealer, and financial penalties will be determined at a later date.
The SEC's complaint alleges that Argyropoulos and Prima violated Section 17(a) of the Securities Act of 1933 ("Securities Act") and Sections 10(b) and 15(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and, against Argyropoulos only, civil money penalties.
Without admitting or denying the allegations in the SEC's complaint, Argyropoulos and Prima consented to a judgment permanently enjoining them from violations of Section 17(a) of the Securities Act and Sections 10(b) and 15(a) of the Exchange Act and Rule 10b-5 thereunder, ordering them to pay, jointly and severally, disgorgement with prejudgment interest, and ordering Argyropoulos to pay civil money penalties. There will be further proceedings before the District Court to determine the amounts of disgorgement with prejudgment interest and civil money penalties. The bifurcated settlement remains subject to court approval. Argyropoulos also consented, without admitting or denying the SEC's findings, to an administrative proceeding order barring him from, among other things, association with any broker, dealer or investment adviser. The administrative proceeding will be instituted following court approval of the bifurcated settlement.
Also on December 23, 2014, SEC separately announced an administrative proceeding against Khaled A. Eldaher, a registered representative living in Austin, Texas. The SEC Enforcement Division alleges that while working for a registered broker-dealer, Eldaher reached a side agreement with Argyropoulos to solicit investors and receive 50 percent of the mark-up on Facebook shares he sold. Eldaher sold $362,887.50 worth of Facebook shares and was paid $15,478 by Prima Capital. He was later terminated by the broker-dealer for selling securities other than through the firm. The Enforcement Division alleges that Eldaher's sales of unregistered securities violated Section 15(a)(1) of the Exchange Act. The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division's allegations and determine what, if any, remedial actions are appropriate.