The U.S. Securities and Exchange Commission (SEC) recently charged Frank Lynold Mercado and his unregistered advisory firm, Tiger Wolf Capital, LLC, with defrauding over 100 investors through a Ponzi scheme.

According to the SEC's complaint, from August 2019 to February 2023, Mercado and Tiger Wolf conducted unregistered securities offerings, raising over $1.4 million from more than 100 individual investors and advisory clients.

The complaint alleges that Tiger Wolf and Mercado falsely claimed that clients would achieve "over 50%" investment returns and emphasized their "unparalleled risk management" capabilities. However, in reality, Mercado and Tiger Wolf did not use most of the client funds for Tiger Wolf's investment products but instead used new investor funds to pay existing investors. The SEC also alleges that Mercado used investor funds for personal expenses and created false account statements to fabricate a profitable appearance.

The complaint, filed on May 30, 2024, in the U.S. District Court for the Western District of North Carolina, charges Mercado and Tiger Wolf 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, as well as Sections 206(1), (2), and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder.

Without admitting to the allegations, Mercado and Tiger Wolf have agreed to a court-approved order that permanently enjoins them from violating the aforementioned provisions and agrees to pay disgorgement, prejudgment interest, and civil penalties in amounts to be determined. Mercado also agreed to a permanent ban from serving as an officer or director of a public company and a permanent prohibition from participating in the issuance, purchase, offer, or sale of securities, except for his personal accounts.

This case serves as a reminder for investors to exercise caution when selecting investment advisors and products, ensuring thorough investigation and assessment of the legitimacy and integrity of the associated companies.