Litigation Release No. 24630 / September 30, 2019
Securities and Exchange Commission v. Gil Beserglik, et al., No. 2:19-cv-08334 (C.D. Cal. filed September 26, 2019)
On September 26, 2019, the Securities and Exchange Commission charged three foreign individuals, Gil Beserglik, Raz Beserglik and Kai Christian Petersen, with deceiving U.S. investors, including vulnerable retirees, and causing them to lose tens of millions of dollars through fraudulent, online sales of high-risk securities known as binary options.
According to the SEC’s complaint, the defendants conned U.S. and foreign investors out of tens of millions of dollars through three online binary options brokers, Bloombex Options, Morton Finance and Starling Capital, by the allure and promise of quick profits. The SEC alleges that defendants utilized call centers in Germany and Israel which operated as “boiler rooms,” in which salespersons used high pressure sales tactics to offer and sell speculative binary options to vulnerable investors. Employees at these call centers 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 names, location and expertise in trading securities and they falsely told investors that the brokers only earned money if investors made money. In reality, the brokers earned money only from investor losses and thus had no incentive to advise investors on how to trade binary options profitably. The complaint alleges that most investors who traded binary options through the three brokers lost money, and some individual retirees lost their entire savings amounting to hundreds of thousands of dollars. The SEC also alleges that the brokers largely refused to honor investor requests to withdraw money from their trading accounts.
The SEC’s complaint, filed in federal district court in central California, charges Gil Beserglik, Raz Beserglik and Kai Christian Petersen with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and with aiding and abetting and being liable as control persons under Section 20(a) of the Exchange Act for the Bloombex Brokers’ and call centers’ violations of Sections 10(b) and 15(a) of the Exchange Act. The SEC’s complaint 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 Gil and Raz Beserglik and Petersen will be led by Kenneth Donnelly and Samantha Williams.