A Connecticut advisor has been charged by the Securities and Exchange Commission for almost depleting the $2.2 million account of a retired couple who had been his clients for 20 years. He did so by engaging in an aggressive stock options trading strategy without the knowledge or informed consent of the clients.

The SEC's complaint alleges that, in 2018, Hai Khoa Dang, 48, of Manchester, Conn., gained complete control over the couple's brokerage accounts and lied to them as he pursued his risky trading strategy without their knowledge. Dang, the complaint said, led the couple to believe that he would invest the majority of their investment portfolio conservatively and, in addition, would retain a minimum of $250,000 in cash in their accounts to weather any potential downturn in the markets.

But within 10 months, Dang’s unauthorized options trading depleted virtually all $2.2 million of their retirement savings. The complaint said that from February through December 2018, the clients’ retirement accounts plummeted to about $145,000 (a 93% drop) because of Dang’s unauthorized stock options trading. By November 2019, the couple’s brokerage account balances bottomed out at approximately $27,000 (a loss of 99%).

As Dang was losing the couple’s retirement savings, he repeatedly misled them about how much money they had lost and the causes of the losses, the complaint said. He convinced them that he should be allowed to continue trading, at times blaming the losses on the national political environment and at other times claiming there were no losses at all because the stock options held value that was not reflected in the monthly account statements.

The complaint further alleged that Dang misrepresented to the clients that he was associated with a registered broker-dealer. His last association with a registered B-D or investment advisor entity was actually in 2006, it said, yet he continued acting as an unregistered investment advisor after leaving employment with a registered firm and continued managing some clients’ money.

The SEC's complaint, filed in federal court in Connecticut, seeks a permanent injunction, disgorgement plus prejudgment interest and a civil penalty.