Two US regulators, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) and announced on Wednesday charges against Kay Yang of Mequon, and her companies, AK Equity Group LLC and Xapphire LLC with fraud and misappropriation.
The CFTC’s charges are related to an off-exchange forex trading scheme in which they solicited $15.7 million from 67 investors. Additionally, the US watchdog has named Yang’s husband, Chao Yang, as a relief defendant for receiving investor funds from the trading scheme.
SEC filed a separate civil complaint against Yang and her companies for the same schemes and raising $16.5 million from 70 investors.
The scheme
According to the CFTC, Yang and her companies ran the trading scheme between April 2017 and March 2020. The defendants solicited investors and raised funds for the purported purpose of forex trading.
The regulator alleges that the defendants made several false representations to the existing and potential pool participants of the scheme. They falsely claimed that they managed hundreds of millions of dollars in a variety of investment vehicles and achieved positive monthly returns.
They claimed that all the investor proceeds they collected were allocated to forex trading and they were going to adhere to strategies that include low leverage ratios and moderate trading frequencies.
The regulator highlighted that Yang and her companies actually suffered trading losses on regular basis using high leverage and high frequency trading strategies. They misappropriated significant amounts of pool participants’ investments and used it for Kay Yang’s personal expenses like gambling, travel and luxury hotels and cars.
Furthermore, Yang transferred over $1 million to a joint bank account which is in the name of her and her husband.
CFTC is seeking full restitution to defrauded pool participants and disgorgement of any ill-gotten gains. Moreover, the regulator wants to impose a civil monetary penalty, permanent trading bans and a permanent injunction.
