SEC takes action against TradeSmart Software RIC Corporation
The Securities and Exchange Commission (SEC) has brought an action against Derek J. Slattery and his company TradeSmart Software RIC Corporation. In a complaint filed with the Nevada District Court, the regulator alleges that the defendants engaged in an offering fraud.
From October 2018 to March of 2020, Slattery and TradeSmart raised over $1.8 million from as many as 300 investors in the United States, Europe, Asia, and Australia through a fraudulent offering of securities in the form of “redeemable units” purportedly in a “fixed portfolio” consisting solely of Apple, Inc. stock options.
Slattery and Tradesmart falsely claimed that TradeSmart used specialized, proprietary software that he created to trade Apple options and generate guaranteed annual returns of 30% or more. In fact, the defendants were not trading in Apple options or any other securities.
Slattery and TradeSmart induced investors to invest by making materially false and misleading statements and omissions concerning, among other things, that investor proceeds would be used to trade Apple options, and that investors could withdraw profits, sell or redeem units, or “cash out” and withdraw their entire investment every 15-30 days.
Contrary to theses representations, Slattery misappropriated all of the investor funds and used them to pay his living expenses, to pursue other potentially illicit “business” activities like credit card fraud, and to make small Ponzi-like payments to investors requesting withdrawals from their accounts.
The SEC alleges that, by their conduct, the defendants violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.
Through this action, the SEC seeks permanent injunctions against future violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; disgorgement with prejudgment interest; and civil penalties against all defendants.