The Securities and Exchange Commission (SEC) charged Frank Lynold Mercado and the unregistered advisory firm he controlled, Tiger Wolf Capital, LLC, with defrauding more than 100 investors through a Ponzi scheme.
According to the SEC complaint, between August 2019 and February 2023, Mercado and Tiger Wolf made unregistered securities offerings, raising more than $1.4 million from more than 100 individual investors and advisory clients.
The complaint alleges that Tiger Wolf and Mercado falsely claimed, among other things, that clients were receiving “50%+” investment returns and cited an “inconsistent focus on risk management.”
In fact, Mercado, who had no prior experience in the securities industry, and Tiger Wolf did not invest most of the client funds in Tiger Wolf’s offerings and instead used money from new investors to make payments to existing investors . The SEC also alleges that Mercado spent investor funds on personal expenses and created false account statements to create the illusion of profits.
The complaint, filed on May 30, 2024, in the US District Court for the Western District of North Carolina, accuses Mercado and Tiger Wolf of violating Sections 5(a), 5(c) and 17(a) of the of 1933. , Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), (2) and (4) of the Investment Advisers Act of 1940 and rule 206(4)-8 below.
Without denying the allegations, Mercado and Tiger Wolf each consented to the entry of an order, subject to court approval, permanently enjoining them from violating the charging provisions and agreed to pay a certain amount of disgorgement, prejudgment interest and civil monetary penalties. Mercado also agreed to a permanent ban from serving as an officer or director of a public company and an order permanently barring him from engaging in the issuance, purchase, offer or sale of securities, except for his personal account.