SEC charges NineSquare Capital Partners and its owner with $11.7M offering
The Securities and Exchange Commission (SEC) has filed charges against Brian Lam of Los Angeles, California, and his company, NineSquare Capital Partners LLC, for an $11.7 million offering fraud from March 2020 to January 2022.
The SEC charged Lam and NineSquare with securities and investment adviser fraud and with securities offering registration violations. The SEC also charged Nathan Nguyen of Anaheim, California, and his company, Nguyen Group LLC, with securities offering and broker-dealer registration violations for his alleged role in raising money from investors.
According to the SEC’s complaint, Lam and NineSquare told investors that they would use their money to trade securities and reported monthly returns ranging from 1.24% to 100%. The complaint alleges that undisclosed to investors, Lam used less than 60% of the investors’ money to trade securities, lost almost all of that money through losing trades, and misappropriated the rest to benefit himself and make Ponzi-like payments to certain investors, among other things.
The complaint also alleges that Nguyen and the Nguyen Group were principally responsible for raising money from investors through his Money Smarts classes that they promoted on Nguyen’s website. The complaint named as relief defendants Yi Ping Lu, Lam’s wife, and Thy Stacy Nguyen, Nguyen’s wife. According to the complaint, Lam used proceeds from the fraud to partially pay for luxury homes purchased in their names.
The SEC’s complaint, filed in the federal district court in Los Angeles, California, charges Lam and NineSquare with fraud in violation of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.
The complaint also charges Lam, NineSquare, Nguyen, and Nguyen Group with violating the securities offering registration provisions of Sections 5(a) and 5(c) of the Securities Act and Nguyen and Nguyen Group with violating the broker-dealer registration provisions of the Securities Exchange Act.
The SEC seeks permanent injunctions, disgorgement with prejudgment interest, and civil penalties from all defendants and disgorgement with prejudgment interest from the relief defendants.