SEC seeks $74M in disgorgement from Spot Option, Pini Peter
After the Court scolded the Securities and Exchange Commission (SEC) for being too reluctant to act in its binary options fraud lawsuit targeting Spot Option and Pini Peter, the regulator has moved for a default judgment against the defendants.
On August 31, 2022, the SEC filed a motion for default judgment as to Spot Option and Pini Peter in the Nevada District Court. The documents, seen by FX News Group, proposed a set of heavy monetary penalties as to the defendants.
The SEC argues that Spot Option and Pini Peter should be ordered to disgorge $56,460,888.04 plus $17,885,590.18 in prejudgment interest.
Spot Option charged its Partners a monthly fee, which was a percentage of investor funds received by the Partner each month. Spot Option often referred to the monthly fee as a “Royalty Fee.” In January 2018, the FBI, accompanied by Israeli police officers, raided Spot Option’s offices in Ramat Gan, Israel and took files from Spot Option’s computers. Thereafter, the FBI produced to the SEC documents including native file excel spreadsheets that show the amount of Royalty Fees Spot Option charged its Partners.
Based on the Royalty Spreadsheets, SEC accountant and Chartered Financial Analyst Shipra Wells calculated that a reasonable approximation of Spot Option’s gross revenue from Partners who offered and sold binary options to United States investors from April 2012 – August 2017 (the “Relevant Period”) is $56,460,888.04. Id. The SEC seeks this amount as disgorgement, together with pre-judgment interest through July 1, 2022, $17,885,590.18.
As a controlling person, Pini Peter is jointly and severally liable with Spot Option for the same amount.
The SEC also requests maximum “third tier” civil penalties against Defendants Spot Option and Pini Peter.
Given that this was a long running fraud, the SEC asks that Spot Option be penalized in the amount of either $73,346,478 or $66,298,176 to deter others from engaging in this type of conduct.
As for Pini Peter, each binary options offer was a violation by him because each offer involved an unregistered security. Treating each month of the 64-month Relevant Period as a single violation results in a per violation penalty of $13,254,592 (64 x $207,103). Because Pini Peter defaulted, the SEC is unable to determine the amount that Spot Option disbursed to him.
Spot Option is still owned by Pini Peter’s wife and remains available as a vehicle for future frauds.
Finn Jakobsen
September 1, 2022 @ 5:19 pm
Love your closing remark.