2020
Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order to stop a newly incorporated local firm from fraudulently soliciting investments in managed forex accounts.
The order names KP Financials, LLC, from Austin, Texas. The firm was incorporated in June 2020, but it is allegedly telling potential clients it has been incorporated for years. According to the order, KP Financials is touting the growth of its operations, claiming it now employs more than 40 account specialists and 20 traders - and is growing day-by-day.
Kevin Vu Pham is the founder and manager of KP Financials, and the company now maintains an office in the Domain, in North Austin. Gerald Johnson, an account specialist, and Daniel Ajwani, a co-founder and account executive, are also named in the order.
The parties are allegedly marketing investments in managed forex accounts. They claim KP Financials has been using investor funds to trade in the accounts, and it has been earning 3% per month for investors. The investments in the managed forex accounts are supposedly safe and secure, and according to testimonials on the firm’s website, the investments provide “minimal risk and maximum reward.”
The offering is a fraud, according to the order. KP Financials is accused of concealing important information and misleading investors with deceptive statements.
For example, the order accuses KP Financials of falsely touting registration to add legitimacy to the forex trading investments. It is allegedly advertising itself as “Registering with the Texas SEC and Series 34 [sic].” According to the order, the statement is simply false. KP Financials is not registered with the State Securities Board and the named parties have not sat for the Series 34 – an examination and license required for persons engaging in off-exchange forex transaction with retail customers.
Also, the parties require investors to execute a management agreement. The management agreement allegedly authorizes KP Financials to trade forex. However, the management agreement also authorizes KP Financials to render services as an investment adviser by using principal to buy, sell or trade securities. Notably, KP Financials is not registered or notice-filed as an investment adviser, and Pham, Ajwani and Johnson are not registered or notice-filed as investment adviser representatives.
The firm is also accused of leveraging changes from COVID-19 in its sales pitch. It allegedly claims it has been able to “take advantage of that chaos,” referring to disruptions in the securities markets due to COVID-19. According to the order, KP Financials further claims to be working with clients using their 401K accounts to fund forex trading – and paying significant taxes as a consequence of withdrawing early – because they are attracted to the purported lucrative profits associated with the managed forex accounts.
As the firm develops its platform, Respondent KP Financials allegedly plans to add “partnerships” with other businesses that will benefit investors. It is also telling investors that it will soon provide investors with access to the firm’s private plane, according to the order.