SEC Charges Former PHX Financial Stockbroker Demitrios Hallas
Demitrios Hallas, a former registered representative of Forefront Capital Markets and and PHX Financial was charged today by the United States Securities & Exchange Commission with the violation of the antifraud provisions of the federal securities laws in connection with the recommendation and sale of unsuitable securities. United States Securities & Exchange Commission v. Hallas, Case 1:17-cv-02999 (S.D.N.Y. April 24, 2017).
Hallas is accused of knowingly and recklessly not having a reasonable basis for recommending daily leveraged Exchange-Traded Funds and Notes (ETFs and ETNs) in his customers’ accounts,
Daily leveraged ETFs and ETNs are characterized by a significant degree of volatility and risk.
ETFs are investment companies and ETNs are unsecured notes. Daily leveraged ETFs and ETNs seek to deliver a multiple, the inverse, or a multiple of the inverse of the performance of an underlying index or benchmark over the course of a single trading day. To accomplish their investment objectives, daily leveraged ETFs and ETNs pursue a range of investment strategies, including swaps, futures contracts, and other derivative instruments. These products are inherently risky, complex and volatile, and are only appropriate for sophisticated investors.
Hallas also under the guise of soliciting funds from one of his customers for investment purposes, misappropriated a total of $170,750 from that customer.
From September 2014 to October 2015. Hallas’s customers paid a total of approximately $128,000 in commissions and fees in connection with the purchase and sale of these 179 positions.
According to the Complaint, “These products sought to double or triple the performance, or the inverse of the performance, of over a dozen different underlying indices, including the S&P 500 VIX Short-Term Futures Index, as well as certain gold mining, oil and gas and Russian, Chinese and Brazilian stock indices.”
Finally, Hallas misappropriated $170,750 from Customer A, a truck driver with no trading or finance experience and no retirement resources outside of the funds that he provided to Hallas. Hallas instead, spent the customer’s funds on personal expenditures.
During the September 2014 and October 2015 relevant time period set out the in the SEC Complaint, Hallas was registered with Forefront Capital Markets. Hallas jointed PHX Financial in August 2015.
FINRA barred Hellas on April 19, 2016 for failing to cooperate in an investigation, and his only customer claim for $14,000 appears to have been made in October 2015.
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