The Securities and Exchange Commission today announced that it obtained a temporary restraining order, asset freeze, and other emergency relief to halt an ongoing fraud targeting the Indian American community that has raised nearly $130 million since April 2021. The fraud is allegedly being conducted by Nanban Ventures LLC, its three founders Gopala Krishnan (aka GK), Manivannan Shanmugam, and Sakthivel Palani Gounder (collectively, Founders), and three other entities that the Founders control.
The SEC’s complaint, unsealed today in the U.S. District Court for the Eastern District of Texas, alleges that the defendants raised more than $89 million from more than 350 investors for investments in purported venture capital funds that the Founders managed through Nanban Ventures LLC and more than $39 million from 10 investors that invested directly in the three other entities controlled by the Founders. The SEC’s complaint alleges that the Founders overstated the profitability of the investments and paid investors at least $17.8 million in fake profits that were actually Ponzi payments. The SEC’s complaint further alleges that defendants misrepresented Krishnan’s expertise and success using his eponymous “GK Strategies” options trading method. According to the SEC’s complaint, Krishnan claimed in a YouTube video that he achieved returns of “more than a hundred percent,” and Nanban Ventures claimed in its venture capital funds’ private placement memorandums that Krishnan would manage the funds to generate returns that would “consistently overperform the S&P 500 Index.” The SEC’s complaint further alleges that the actual trading returns using GK Strategies were, with limited exceptions, lower than the returns of the S&P 500 index, lower than the percentage returns that Krishnan claimed in YouTube videos, and negative on numerous occasions.
‘Enforcement 40’ for 2020
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