The Securities and Exchange Commission alleges that Firas Hamdan provided falsified brokerage records that drastically overstated assets and hid his massive trading losses from his clients. Hamdan allegedly raised $6 million during a five-year period from at least 33 investors, who were mostly fellow members of the Houston-area Lebanese and Druze communities, according to an SEC complaint filed in a federal court in Houston.
Investigators said Hamdan told prospective investors that he would pool their investments with his own money and conduct high-frequency trading using a proprietary trading algorithm. He promised annual returns of 30 percent and assured his clients that the program was safe. Investigators said the program was a “dismal failure,” generating $1.5 million in losses.
Because the program failed to deliver the promised profits, he told investors that the funds were tied up in the Greek debt crisis and MF Global bankruptcy, the complaint alleges.
“Hamdan’s affinity scam preyed upon people’s tendency to trust those who share common backgrounds and beliefs,” said David R. Woodcock, Director of the SEC’s Fort Worth Regional Office, in a statement. “Hamdan raised money by creating the aura of a successful day trader among friends and family in his community, and he continued to mislead them and hide the truth while trading losses mounted.”