SEC goes after binary options scheme Spot Option, Pini Peter and Ran Amiran
The United States Securities and Exchange Commission (SEC) is targeting Spot Option and its owners Malhaz Pinhas Patarkazishvili (Pini Peter) and Ran Amiran in an action launched on April 16, 2021, at the Nevada District Court.
The case concerns a multi-million dollar fraudulent scheme involving unregistered offers and sales of security-based “binary options” to retail investors in the United States from at least April 2012 through August 2017. The scheme was overseen by Pini Peter and Ran Amiran through a company they owned and controlled called Spot Option, Ltd. (“Spot Option”) now known as Spot Option Tech House, Ltd.
The SEC’s complaint, seen by FX News Group, alleges that Spot Option contracted with third parties, which it referred to as “Partners,” “White Labels,” and “Brands”, to market its binary options. Unbeknownst to investors, Spot Option structured its business model so that its Partners were the counterparty on every trade. Under this structure, Spot Option and its Partners made their money principally from investor losses.
According to the SEC’s complaint, to make the scheme profitable, Spot Option set the payout terms on its options in a way that made it likely that most investors would lose all or a substantial portion of their investment within the first five months of trading. Spot Option trained its Partners, however, to deceptively market the binary options as profitable investments.
Spot Option used additional deceptive and manipulative practices to increase investors’ losses and boost Spot Options’ income stream. These practices included manipulating the trading platform to increase the probability that trading would be unprofitable and offering investors a so-called “bonus” to lock-up investor funds and prevent withdrawals, which, when combined with the payout terms, virtually guaranteed investor losses.
Through these and other deceptive and fraudulent acts, Spot Option sought and reached thousands of investors in the United States, including retirees, who traded through its platform. Many of those investors lost most of their money including, in some cases, hundreds of thousands of dollars meant for retirement. Spot Option and its Partners, on the other hand, raked in millions in profits, the regulator says.
The SEC accuses Spot Option of violation of the registration provisions of Section 5(a) and 5(c) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and 77e(c)], the antifraud provisions of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. §§ 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b‒5].
The Complaint says that Defendants Pini Peter and Amiran are liable for violations of Section 5 of the Securities Act because they each played a substantial role in Spot Option’s offers and sales of binary options. Pini Peter and Amiran are also allegedly liable for Spot Option’s violations of the Exchange Act because they are controlling persons of Spot Option as defined by the Exchange Act.
The SEC seeks disgorgement of Defendants’ ill-gotten gains, prejudgment interest, civil monetary penalties, an injunction against further violations of the federal securities laws as to all Defendants, a specific conduct based injunction as to the individual defendants, and other appropriate relief.