Securities Fraud Cases in Massachusetts

In the case of Securities and Exchange Commission v. Trends Investments Inc., the SEC brought allegations of securities fraud against several defendants. The District Court found that the SEC did not provide sufficient evidence to prove that two defendants, Bendelac and Capellini, violated security laws.

The case involved the SEC suing Trends Investments Inc., Brandon Rossetti, Clinton Greyling, Leslie Greyling, Roger Bendelac, and Thomas Capellini for securities fraud. While Clinton Greyling settled with the SEC early on, Trends, Rossetti, and Leslie Greyling defaulted. The claims against Bendelac and Capellini went through a lengthy discovery process, leading to a trial in October 2024.

The court examined whether Bendelac committed primary violations of securities law and aided and abetted securities fraud. Additionally, the court assessed whether Capellini aided and abetted securities fraud by Bendelac. After hearing testimonies and reviewing exhibits, the court delivered its findings and decisions.

According to Section 17(a)(1) of the Securities Act and Section 10(b) of the Exchange Act, individuals are prohibited from engaging in schemes to defraud in connection with the sale of securities. To establish a violation, the plaintiff must demonstrate intent to defraud or recklessness on the defendant’s part.

The court determined that the SEC did not meet its burden of proving, by a preponderance of the evidence, that Bendelac knowingly or recklessly defrauded investors. Additionally, the SEC’s allegations of Bendelac inducing securities purchase or sale were not substantiated. Nor did the SEC prove that Bendelac was negligent regarding investor fraud risks.

Furthermore, the SEC failed to demonstrate Bendelac’s awareness or substantial assistance in any alleged improper schemes. Consequently, Bendelac was not found to have aided and abetted securities fraud as the SEC claimed. Similarly, the SEC did not prove that Capellini was involved in any primary violations or knowingly assisted in any security law breaches.

Based on these findings, the SEC’s allegations of securities fraud against Bendelac and Capellini were dismissed. The court concluded that the SEC had not met the required evidentiary standard to establish violations of the Securities Act or Exchange Act by the defendants.