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by Mike Caswell

The U.S. Securities and Exchange Commission and the U.S. Department of Justice have charged Toronto-area resident Ran Armon over a scheme to defraud on-line brokerage customers. According to prosecutors in New Jersey, he and others accepted deposits from 260 clients, but did not use the money for trading. Instead, the clients were given a simulated on-line trading platform, the SEC claims.

The allegations against Mr. Armon, 45, are contained in an indictment and an amended complaint the SEC filed on Wednesday, May 10, in the District of New Jersey. The SEC says that Mr. Armon and others ran a purported day-trading firm called Nonko Trading. They arranged for investors to deposit money with Nonko and provided those investors with phony trading accounts, the complaint states. In all, the group defrauded investors of $1.4-million, according to the SEC. (All figures are in U.S. dollars.)

The scheme, as described in the complaint, began in 2013. One of Mr. Armon's co-defendants, a Thai resident named Naris Chamroonrat, set up Nonko as a proprietary trading firm. To attract day-traders, the firm offered terms that were unavailable anywhere in the United States. These terms included a minimum deposit of $2,500 (and occasionally lower) and a margin account at a ratio of 20:1, the SEC says. (That is, for each dollar a client deposited, he could enter $20 worth of trades.) The firm also attracted customers through low commissions.

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