The Securities and Exchange Commission (SEC) took action against 29-year-old Solomon Lichtenstein, accusing him of orchestrating a fraudulent investment scheme by misrepresenting how he would use investors’ funds, misrepresenting their investment returns and misappropriating their investments for personal purposes.
The SEC’s complaint was filed in the Southern District Court of New York on October 22, 2025.
The complaint alleges that, from July 2022 to August 2024 (the “Relevant Period”), Lichtenstein raised at least $2.7 million from more than 25 investors – many of whom were family members, neighbors and friends of Lichtenstein – through two entities: Taraxa Capital Fund, LP or “LP Stone Investment’, ‘Traxa Capital Fund, LP’ or ‘Tol ara’. Trading Inc.
Lichtenstein, as an investment adviser to the Fund, promoted Taraxa as a hedge fund that invested in securities using a day-trading strategy from which he claimed to have personally benefited.
Similarly, Lichtenstein represented that money from Lightstone investors would be invested using the same trading strategy. However, instead of being subject to market risk, Lightstone’s investors were to receive a fixed interest payment of 5% per month, which was intended to be derived from Lichtenstein’s trading returns.
The SEC complaint further alleges that instead of investing all of the money it raised from Taraxa and Lightstone investors as promised, Lichtenstein misappropriated investor funds to pay for personal expenses, as well as to make Ponzi payments to satisfy redemption requests and interest obligations to other investors.
Lichtenstein spent hundreds of thousands of dollars of investment funds on credit card payments, mortgage payments, bars, restaurants, travel and cash withdrawals. To pay these personal expenses, Lichtenstein embezzled approximately $868,000 from Taraxa and approximately $98,000 from Lightstone.
As a result of Lichtenstein investing a portion of investors’ money as promised, the overall rate of return on transactions was negative. In total, Lichtenstein’s trades on behalf of Taraxa and Lightstone investors resulted in net losses of approximately $200,000.
Instead of disclosing these losses to investors, Lichtenstein fabricated positive returns through online dashboards for Taraxa investors who falsely reported significant increases in the value of their investments.
In or around the summer of 2024, Lichtenstein’s plan collapsed when investors ran out of money and he admitted to several investors that he had used investor funds to pay for his personal
expenses. As a result of Lichtenstein’s scheme, investors lost a total of more than $1.5 million.
The SEC charges the defendant with violations of Section 17(a) of the Securities Act of 1933 (“Securities Act”). [15 U.S.C. § 77q(a)]Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1), 80b-6(2), 80b-6(4)] and section 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
The regulator seeks a final judgement:
- permanently enjoining Liechtenstein from engaging in the acts, practices and business activities alleged against it herein and from violating the federal securities laws and regulations this Complaint alleges it has violated;
- the standing authorization of Liechtenstein directly or indirectly, including but not limited to, through any entity owned or controlled by him, to engage in the issuance, purchase, offer or sale of any security; provided, however, that such order does not prevent him from buying or selling securities for his personal accounts;
- permanently restraining and prohibiting Liechtenstein from directly or indirectly acting or being associated with any investment adviser;
- ordering Lichtenstein to disgorge all ill-gotten gains received as a result of the violations alleged herein and to pay prejudgment interest thereon pursuant to Sections 21(d)(3), 21(d)(5) and 21(d)(7) of the Exchange Act. [15 U.S.C. §§ 78u(d)(3), 78u(d)(5) & 78u(d)(7)];
- order Liechtenstein to pay civil money penalties pursuant to Securities Act Section 20(d) [15 U.S.C. § 77t(d)]Deed of Exchange, section 21(d)(3) [15 U.S.C. § 78u(d)(3)]and Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; and
- ordering such other and further relief as the Court may deem just and proper.