The U.S. Securities and Exchange Commission charged Pannon Investment Advisors LLC and Dusan Varga, its chief executive officer, alleging they fraudulently raised approximately $1.6 million from at least 20 investors through an unregistered securities offering. Most of the investors are members of the Serbian-American community, and this case is part of the SEC Miami office’s Fraud Against Minority Groups Initiative.
The SEC’s complaint alleges that from May 2020 through approximately January 2024, Varga and Pannon raised at least $1.6 million from at least 20 investors encouraged to invest in the Pannon Risk-Managed Income Fund.
Varga and Pannon allegedly made repeated material misrepresentations and sold unregistered securities. This included Varga’s and Pannon’s use of investor funds and the profitability of the Pannon fund’s trading activities. They alleged that the fund generated high income while managing downside risk and promised investors fixed returns in the form of dividends of 3% or 4% a month. Defendants falsely said that, upon request, investors could receive a full return of their principal funds within a few business days and that investors’ principal funds were matched in an escrow account to ensure the liquidity of their investments. In reality, there was no escrow account.
The defendants also misrepresented Varga’s background as a purported registered representative of a broker-dealer.
The complaint further alleges Varga and Pannon made Ponzi-like payments to investors, misused and misappropriated investor funds, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors, such as allegedly engaging in riskier, uncovered options trading that ultimately resulted in aggregate trading losses of over $200,000.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, charges Varga and Pannon with violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) and Rule 206(4)-8 thereunder of the Investment Advisers Act of 1940. Without admitting or denying the allegations in the SEC’s complaint, Varga and Pannon consented to the entry of a final judgment, subject to court approval, which would permanently enjoin each of them from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) and Rule 206(4)-8 thereunder of the Advisers Act.
The final judgment, if approved by the court, also would impose an officer and director bar against Varga, and order Varga and Pannon to pay disgorgement plus prejudgment interest and civil penalties in amounts to be determined by the court at a later date upon motion of the SEC.
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