SECURITIES AND EXCHANGE COMMISSION Washington, D.C. LITIGATION RELEASE NO. 16055 / February 8, 1999 SECURITIES AND EXCHANGE COMMISSION v. FOREX ASSET MANAGEMENT, L.L.C., ET AL. Civil Action No. 3:99-CV-0256-P SEC CHARGES SECURITIES FRAUD IN INTERNET FOREIGN CURRENCY TRADING SCHEME On February 5, 1999, the Commission charged a Dallas company and its president with fraud, and sought a temporary restraining order, preliminary injunction, asset freeze, accounting and expedited discovery. Investors may have lost as much as $2 million in the fraudulent foreign currency- trading scheme. The Commission secured a temporary restraining order against the defendants to prohibit their attempted withdrawal of $750,000 of investor funds from a brokerage account of a registered securities and commodities firm. The Commission’s complaint names Forex Asset Management, L.L.C. ("Forex") and its president, Jason N. Kosova ("Kosova") as defendants. Judge Fitzwater signed the temporary restraining order granting the relief sought by the Commission and also appointed a receiver to assume responsibility for the company and secure assets for the benefit of investors. Specifically, the complaint alleges that: * Since October 1997, Forex and Kosova raised at least $3.7 million from at least 40 investors in three states utilizing radio infomercials, the internet, "cold calls," and seminars. * Forex and Kosova promised to invest investor funds in foreign currency transactions, and to engage in "trading techniques and risk control strategy" to achieve very high rates of return with limited risk. Forex and Kosova also sent clients monthly account statements, which falsely reflected profits earned in their accounts. * In reality, only about $600,000 of investor money was so invested. Instead, Forex and Kosova pooled investor monies and used these funds for other purposes. At least $2 million of investor funds are presently unaccounted for. * In December 1998, Forex and Kosova informed numerous investors that most of their funds had been lost. However, on February 3, 1999, Kosova attempted to withdraw $750,000 of investor funds remaining in a Forex trading account. * Kosova continued to raise funds from Arizona investors after assuring the Arizona Corporation Commission ("ACC") that he would cease raising funds until properly registered with the ACC. Kosova also represented to the ACC that he had disclosed the complete list of investors when in reality he had withheld two large investors’ names. Kosova further claimed to the ACC that he had refunded the principal investment of all Arizona investors when he continued to hold the funds of two investors. The Complaint charges that Forex and Kosova violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act) and Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder, based upon these same activities. The Complaint seeks a permanent injunction against Forex and Kosova, seeks a freeze of the assets of, and disgorgement and civil penalties and an accounting from, Forex and Kosova. The Commission would like to acknowledge the outstanding cooperation of the State Securities Board of Texas, the Securities Division of the Arizona Corporation Commission and the Washington Department of Financial Institutions, who worked closely with the Commission in its investigation. Their assistance is yet another example of the effective coordination by the state securities regulators and the Commission in their joint efforts to police securities fraud. Investors are advised to read the SEC’s "Cyberspace" Alert before purchasing any investment promoted on the Internet. The free publication, which alerts investors to the telltale signs of online investment fraud, is available on the Investor Assistance and Complaints link of the SEC’s Home Page on the Worl Wide Web . It can also be obtained by calling 800-SEC-0330. Investors are encouraged to report suspicious Internet offerings (or other suspicious offerings) via E-Mail to . A user friendly form to assist you in making a report is available at the Enforcement Complaint Center on the Enforcement Division link of the SEC Home Page. Investors can also mail a report to the SEC Enforcement Complaint Center, Mail Stop 8-4, 450 Fifth Street, Washington, D.C. 20549.