SEC Charges California Trader in Alleged $43 Million Ponzi-Like Scheme
From the desk of Jim Eccleston at Eccleston Law
The Securities and Exchange Commission (SEC) has filed a civil action against a California day trader accused of operating a $43 million Ponzi-like scheme that allegedly defrauded more than 400 investors.
According to InvestmentNews, the SEC filed its complaint in the Northern District of California, alleging that Sudheesh Nambiar solicited investors through Telegram chatrooms and personal connections, including within the Indian American community. The SEC claims that Nambiar promoted an operation known as Spartan Trading and promised annual return of approximately 20 t o40 percent. He told investors he would pool their funds, retain 30 percent profits, and distribute the remaining 70 percent.
The SEC alleges Nambiar sent fabricated account statements, spreadsheets, and performance charts that reflected consistent gains. He also allegedly posted false updates in a Telegram investor group to reinforce the appearance of success.
The SEC alleges that Nambiar's trading activity resulted in substantial losses. As reported by InvestmentNews, he accumulated approximately $21 million in losses across multiple brokerage accounts and did not achieve a single profitable year during the life of the scheme, which spanned from at least November 2018 through May 2024. One brokerage firm allegedly issued multiple warning letters regarding those losses.
To sustain the operation, the SEC claims that Nambiar borrowed approximately $8 million from high-interest lenders and used new investor funds to pay earlier investors, totaling about $18 million in Ponzi-like payments. InvestmentNews further reports that he allegedly diverted funds for personal expenses, including travel, tuition, and loan payments.
The SEC also alleges that Nambiar launched a separate vehicle, Spartan Trading Capital Fund, LP, raising approximately $900,000 from nine investors without disclosing the alleged losses or the nature of the underlying scheme. According to InvestmentNews, the fund collapsed within months, with its value declining to nearly nothing.
As InvestmentNews reports, the scheme unraveled in 2024 when investors sought redemptions and Nambiar could not satisfy those requests. He allegedly restricted communications within the Telegram group and stopped responding to investors.
The SEC seeks permanent injunctions, disgorgement with prejudgment interest, civil monetary penalties, and a bar preventing Nambiar from associating with an investment adviser.
Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.
Tags: eccleston, eccleston law, sec enforcement, securities fraud, ponzi scheme, investment fraud
