Markets Wired

On October 9, 2019, the Securities and Exchange Commission charged two foreign individuals, Anton Senderov and Lior Babazara a/k/a Lior Bar, with defrauding more than 2,800 U.S. investors and causing them to lose over $5 million through online sales of high-risk securities known as binary options.

According to the SEC’s complaint, the defendants conned investors through two online binary options brokers they controlled, LBinary and Ivory Option.  The SEC alleges that the defendants also owned and controlled LianTech Finance Marketing, Ltd., which operated a call center in Israel that functioned as a “boiler room.”  Employees at the call center allegedly persuaded investors to open binary option trading accounts and deposit large sums into those accounts.  According to the complaint, call center employees lied to investors about their professional backgrounds and falsely told investors that the brokers earned money only if investors made money.  In reality, the brokers earned money only from investor losses and therefore had no incentive to advise investors on how to trade binary options profitably.  As alleged, most investors lost money, with some losing their entire savings. The SEC also alleges that the brokers largely refused to honor investor requests to withdraw money from their trading accounts.

The SEC’s Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force (RSTF) today issued a pair of Investor Alerts relevant to this action. The first Alert warns investors not to fall for investment scams, and informs investors of common tactics that investment scam artists use. In the second Alert, OIEA and RSTF urge investors to be wary of paying for investments by credit card or wiring money abroad.

The SEC’s complaint, filed in federal district court in the Eastern District of Washington, charges Senderov and Babazara with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and with violating Section 20(a) of the Securities Exchange Act of 1934 (Exchange Act) by acting as control persons for LianTech, LBinary, and Ivory Option’s uncharged violations of the antifraud provisions of Sections 10(b) and 15(a) of the Exchange Act and Rules 10b-5(a) and (c) thereunder. The SEC seeks disgorgement of ill-gotten gains, prejudgment interest, financial penalties, and permanent injunctions against all three defendants.

The SEC’s investigation was conducted by Jason Anthony, Michael Fuchs, and Deborah Maisel and supervised by Jennifer Leete.  The SEC’s litigation against Senderov and Babazara will be led by Christian Schultz and David Nasse.