Abida Khan, also known as Sheik Firdosh Khan, of Passadena, California, a stockbroker formerly employed with Ameritas Investment Corp., has been permanently barred by the Securities and Exchange Commission (SEC) from acting as an investment adviser or broker, or associating with firms that provide investment advice or sell securities to the public, according to an Order Making Findings and Imposing Remedial Sanctions containing findings that Khan committed securities fraud. In the Matter of Abida Khan, Administrative Proceeding No. 3-17948 (June 8, 2017).
Evidently, Khan was criminally convicted of securities fraud; conduct violative of 15 U.S.C. § 78j(b). According to the indictment, Khan executed a scheme to manipulate and control the stock price of a company, VGTL, in order to increase VGTL stock trading volume and inflate VGTL’s stock price. Khan also purportedly effected a scheme designed to induce prospective investors’ purchases of VGTL private shares by making misleading and false statements.
The Order stated that Khan falsely stated that VGTL investors would be positively affected from reverse-mergers between private entities and VGTL, where those reverse-mergers never took place. Apparently, between 2012 and 2014, fifty investors were defrauded out of $11,000,000.00 through sales of VGTL. SEC determined Khan’s criminal conviction to be grounds to bar her according to Securities and Exchange Act of 1934 Section 15(b)(6) and Advisors Act Section 203(f).
Khan was previously suspended for four months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings of Khan selling away and engaging in unapproved outside business activities. Letter of Acceptance, Waiver and Consent, No. 2015045211101 (Nov. 10, 2015).
According to the AWC, in 2013, Khan sold a list of her Ameritas customers to another broker-dealer for $375,000.00. Evidently, an Asset Purchase Agreement had been executed, wherein the purchaser’s agent detailed the purchaser as a group of broker-dealer professionals seeking to accumulate funds for public offerings by offering attractively priced private placements. The AWC stated that the purchaser’s agent made arrangements for Khan’s customers to open accounts with broker-dealers in which the members of the purchaser were employed. Apparently; the agent turned out to be someone that had been barred by the SEC for stock manipulation. Khan reportedly failed to notify Ameritas in reference to the agreement to sell her customer information. FINRA found her conduct in that regard to be violative of FINRA Rules 2010 and 3270.
The AWC additionally stated that in the course of facilitating meetings between the purchaser’s agent and customers of Ameritas, Khan distributed a letter to Ameritas customers in August of 2013 that contained misleading and false statements. Specifically, the AWC stated that Khan joined the purchaser and had the ability to switch the existing investment portfolios of her customers to portfolios containing high yield, short-term growth investments that offered more security to customers. Evidently, both of those statements were false. Customers were also reportedly informed in the letter that the purchaser could possibly offer them a way to generate ten percent yields on convertible bonds; however, no other characteristics or risk factors had been discussed. FINRA found that Khan’s misleading communications were violative of FINRA Rules 2010 and 2210(d).
FINRA Public Disclosure reveals that a customer initiated investment related arbitration claim in reference to Khan’s conduct was settled for $3,915,277.00 in damages supported by accusations including financial elder abuse, omissions and misrepresentations, suitability, negligence, breach of fiduciary duty, and fraud in regard to over-the-counter equities effected in customers’ accounts. FINRA Arbitration No. 16-03208 (Nov. 29, 2016).
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