The Securities and Exchange Commission (SEC) filed suit against Dusan Varga and Pannon Investment Advisors LLC.
The SEC complaint, seen by FX News Group, was filed in the Southern District of Florida on October 30, 2024.
From May 2020 until at least January 2024, Mr. Dusan Varga and his company Pannon Investment Advisors LLC extorted approximately $1.6 million from at least 20 investors through a series of unregistered and fraudulent offerings. was procured.
Defendant solicited investments in securities through investment agreements to invest in Pannon Risk Management Income Fund, an investment fund purportedly managed by Defendant. Defendants alleged that the Pannon Fund traded covered stock options to generate high income while managing downside risk, while promising investors fixed returns in the form of monthly dividends of 3% or 4%. made a false claim that it was.
The defendants solicited investors through a combination of phone calls, text messages, WhatsApp messages, emails, in-person meetings, Zoom meetings, and written correspondence.
Defendants also solicited investors through a referral program that paid referral fees to existing investors to introduce new investors to investments in Defendants’ clients, the Pannon Funds.
In addition, Defendants made numerous material falsehoods about the use of investor and customer funds, the profitability of Pannon’s trading, Varga’s history as a registered representative of a broker-dealer, and the safety of investing in Pannon Funds. Displayed. For example, Defendants advised investors that upon request, investors could receive a full return of their principal funds within a few business days, and that their principal funds would be used to ensure the liquidity of their investments. He falsely explained that the information would be checked into the escrow account.
In reality, no escrow account existed; the defendants made Ponzi-like payments to investors, and Varga diverted and commingled investor and client funds into his own personal bank and brokerage accounts. .
Rather than continually trading covered stock options using investor and customer funds as promised to investors, defendants often engaged in riskier uncovered option trading. , the total trading loss ultimately exceeded $200,000.
The scheme unraveled in the final quarter of 2023, with Varga and Pannon suspending dividend payments to investors, initially blaming online bill payment services and bank processing issues for delayed payments. . Despite numerous redemption requests from investors, Varga and Pannon have not been able to return investors’ principal.
The SEC charged the defendants with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (the “Securities Act”), 15 USC §§ 77e( a) and (c) and 77q(a)), and Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) (15 USC § 78j(b)) and Regulation 10b-5 (17 CFR § 240.10b-5). Varga and Pannone also referred to Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (the “Advisers Act”) and Regulation 206(4)-8 thereunder. (15 USC §§ 80b-6(1), (2), (4), and 17 CFR § 275.206(4)-8)) and breached its fiduciary duties to its advisory client, Pannon Fund. violation.
The Commission seeks injunctive relief, disgorgement with prejudgment benefits, and civil penalties against the defendants. The commission also seeks an order imposing an officer and director ban on Varga.
