Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Wednesday, December 12, 2007

SEC Obtains Emergency Freeze in Options Trading Scheme

The SEC announced that it obtained an emergency order temporarily freezing the assets of Terry E. Provence (Provence) and DT Capital LLC (DT Capital), in connection with their alleged roles in a fraudulent options trading scheme. The SEC alleges that no later than March 2007 and continuing until at least August 2007, Provence pitched a sham index option trading program to primarily inexperienced investors with false promises that their principal would be safe and created DT Capital as a vehicle to marshal investor funds and promote the options program. The Complaint further alleges that Provence and DT Capital falsely represented that a major brokerage firm guaranteed the safety of investor principal, that the actual options trader, Fredrick J. Kunen (Kunen), was a licensed securities trader and director at the brokerage firm, that the options program had a successful ten-year track record, and that investors could expect extraordinary returns. The Complaint alleges that Provence and DT Capital raised at least $3.5 million from approximately forty investors and that Provence and DT Capital profited by at least $130,000.

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