Regulators Move to Stop Alleged Scam by Day Trader

Federal regulators have won a restraining order and asset freeze against a day trader they say raised $6.2 million from investors by fraudulently promising them big returns in trading stocks with their money.

The day trader, Mark Drucker of Atlanta, failed to tell investors he has lost hundreds of thousands of dollars in the rapid-fire computer trading, the Securities and Exchange Commission said Friday.

A federal judge in Atlanta granted the temporary restraining order and a freeze of Drucker’s assets. The SEC also is seeking an unspecified fine against him and an accounting of his use of investors’ money.

Drucker couldn’t be reached for comment at three telephone numbers Friday. He was not represented by a lawyer, SEC attorneys said.

The SEC also named in its complaint Michael Weinstock, an Atlanta attorney, saying he fraudulently made $1.6 million from participating in Drucker’s scheme. Weinstock’s lawyer, Pat Huddleston, said his client “was an investor and at no time did he have any knowledge that there was anything illegal” in Drucker’s scheme.

The SEC alleged that from at least July 1998 to September 1999, Drucker raised $6.2 million from an estimated 80 investors, telling them he was a successful day trader and promising them returns of 50% or more, in two months or less.

In fact, the SEC said, Drucker lost more than $630,000, then used the money from recent investors to pay earlier investors in the classic formula of a Ponzi scheme.