As the Market Crisis Unfolded Adviser Turned to Fraud

For over a decade Anand Sekaran successfully operated Wasson Capital Advisors Ltd. Mr. Sekaran was the sole director and president of Wasson which he managed from New York City. He also advised separately managed accounts for other clients and, during 2011, was associated with a broker-dealer.

Wasson was a British Virgin Islands company formed in 2007. Its predecessor had been formed in New York. The firm served as an unregistered advisor, with operations based in Miami beginning in 2010.

From the time of its formation in 1997 Wasson raised about $16.2 million. Initial investors were family and friends. Over the years there were about 25 investors. Some used the proceeds to establish master trading accounts. As part of an options trading strategy the defendants conducted options transaction through a Master Trading Account whose profits were supposed to be shared among the clients.

Wasson typically, but not exclusively, used an “Options Overlay” investment strategy. The focus of the strategy was to generate cash on the monthly options expiration dates without incurring margin costs.

As the market crisis unfolded in 2008 defendants began incurring significant losses from their Options Overlay strategy. In that year there were nearly $1.1 million in losses. Despite those losses, defendants continued to tell clients that the firm was operating at a profit. To conceal the losses Mr. Sekaran and Wasson created fictitious account statements on a monthly basis for three years. As the losses continued Mr. Sekaran also misappropriated client funds to cover a variety of personal expenses.

The Commission’s complaint alleges violations of Exchange Act Section 10(b) and Advisers Act Sections 206(1) and (2). The case is in litigation. SEC v. Sekaran, Civil Action No. 12 CIV 8199 (S.D.N.Y. Filed Nov. 9, 2012).

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Seminar: The ABA’s premier program on securities fraud, the National Institute on Securities Fraud, will be held on November 15 and 16, 2012 in New Orleans (here).

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