SEC Charges Ronald A. Pallek in $1.54 Million Fraudulent Investment Scheme

U.S. Securities and Exchange Commission (SEC) sues Ronald A. Pallek for orchestrating a securities fraud of investors Ronald A. Pallek, the U.S. accuses of fraudulent securities offering which duped victims

On March 10 in the Wisconsin Eastern District Court, the complaint claims that Pallek defrauded investors into believing their investments were worth twice their money thanks to an “Iron Condor” options trading game promising year returns on clients money.

SEC complaint says Pallek took in “at least” $1.54 million or so from at least 87 investors between February 2020 and September of this year. Over this time frame, he overstated the risks of his trading strategy, he lied about using investor money to manage accounts and gave them all false impressions that he had sufficient reserve funds on hand to cover any potential losses. In addition to the fabricated account statements he sent out to investors swaying them into believing their trades had been profitable, given that he had lost nearly $991,000 trading options and/or other securities.

Pallek ran the scheme by using investor funds to make payments to earlier investors, in effect a Ponzi scheme. In the Fall of 2023, when a few investors demanded the funds Pallek said his accounts had been frozen at the bank and produced for them fraudulent bank statements. Those items indicated his accounts were frozen and held more than $1.25M.

The SEC alleges Pallek violated various provisions of securities laws including the Securities Act of 1933, as amended by the Financial Services Modernization Act of 1999 (1933 Act), Securities Exchange Act of 1934, and Investment Advisers Act of 1940. The Commission is praying for a permanent injunction in the name of Pallek for securities fraud, with respect to the disgorgement of ill-gotten gains, pre-judgment interest, and civil penalties.