The U.S. Securities and Exchange Commission alleges that a former broker defrauded investors in an astrology-based Ponzi scheme.
The SEC alleges that Gurudeo “Buddy” Persaud lured family, friends, and others into investing in his firm, White Elephant Trading Company LLC, by falsely guaranteeing that their money would be safe and would generate high returns. It says that Persaud told investors he would invest in the debt, stock, futures, and real estate markets, but did not reveal that his trading strategy was based on his belief that markets are affected by gravitational forces.
The commission says that Persaud primarily relied on an Internet service that provided directional market forecasts based on lunar cycles and gravitational pull when making his trading decisions.
“His strategy was premised on the idea that gravitational forces affect mass human behavior, and in turn, the stock market. For example, Persaud believed that when the moon exerts greater gravitational pull on the Earth, people feel dejected and are more inclined to sell securities,” it says.
According to the SEC’s complaint filed in U.S. District Court for the Middle District of Florida, Persaud used some investor money to make payments to other investors, which it cites as the hallmark of a Ponzi scheme. And, it says that he also lost $400,000 through his trading, and diverted at least $415,000 to pay for his personal expenses.
The allegations have not been proven. The SEC is seeking disgorgement of ill-gotten gains, financial penalties, and injunctive relief against Persaud to enjoin him from future violations of the federal securities laws.
“Persaud preyed on people who trusted him by promising high and steady returns while hiding his unconventional trading strategy,” said Eric Bustillo, director of the SEC’s Miami Regional Office. “When Persaud blatantly lied to investors and hid their losses through a Ponzi scheme, he should have known that an SEC enforcement action was in the stars.”