Texas Self-Styled Day Trading Expert Charged with Fraud

Firas Hamdan, a self-styled successful day trader in Sugar Land, Texas, was accused of fraudulently raising more than $6 million from at least 33 investors in a fraudulent investment scheme.  Most of his victims are members of the Lebanese and Druze communities in and around Houston.

Hamdan assured his investors that he had developed an algorithmic trading program that could consistently beat the market, according to the Securities Exchange Comission ‘s complaint.

Hamdan told his investors that he would pool their investments with his own money and conduct high-frequency trading using his proprietary trading algorithm, according to SEC.  He promised them annual returns of 30% and assured them that his program was secure, charged the regulators.

To advance his plan, Hamdan made use of false documents that showed positive returns over a period of several years, the SEC alleged.  Hamdan made up the story of a well-known Dallas hedge-fund manager who had made a million-dollar investment and had promised to invest more, according to the regulators’ complaint.

Hamdan day-traded some of the investors’ funds but he was unsuccessful and lost almost $1.5 million throughout 2007-2011, according to the SEC complaint. His trading patterns indicate that he lost money systematically and therefore couldn’t have generated enough returns to pay the monthly distributions to his investors, charged the SEC. Despite this, he continued to solicit money from his investors, SEC contends.

In October, 2011 Hamdan stopped paying returns to his investors and made up various excuses, the SEC alleged.  Hamdan told his investors that the funds were tied up in the Greek debt crisis and the MF Global bankruptcy among others, according to SEC’s complaint.

Throughout 2011 and 2012, Hamdan continued to request funds from his clients.  He received new funds at least as recently as January, 2012, according to the complaint.

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Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


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