FILING A FALSE TAX RETURN

Pled guilty

CONSPIRACY TO COMMIT MAIL AND WIRE FRAUD

Pled guilty

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC ADMINISTRATIVE RELEASE 34-60891, OCTOBER 27, 2009: THE SECURITIES AND EXCHANGE COMMISSION ("COMMISSION") DEEMS IT APPROPRIATE AND IN THE PUBLIC INTEREST THAT PUBLIC ADMINISTRATIVE PROCEEDINGS BE, AND HEREBY ARE, INSTITUTED PURSUANT TO SECTION 15(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AGAINST MOHIT A. KHANNA ("KHANNA" OR "RESPONDENT"). ON OCTOBER 6, 2009, A JUDGMENT WAS ENTERED BY CONSENT AGAINST KHANNA, PERMANENTLY ENJOINING HIM FROM FUTURE VIOLATIONS OF SECTIONS 5(A), 5(C), AND 17(A) OF THE SECURITIES ACT OF 1933 AND SECTION 10(B) OF THE EXCHANGE ACT AND RULE 10B-5 THEREUNDER, IN THE CIVIL ACTION ENTITLED SECURITIES AND EXCHANGE COMMISSION V. MOHIT A. KHANNA, ET AL., CIVIL ACTION NUMBER 09¬CV-1784 BEN (POR) IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF CALIFORNIA.

Order

Bar (Permanent)

ASSOCIATION WITH BROKER, DEALER

Indefinite

10/27/2009

UNITED STATES COMMODITY FUTURES TRADING COMMISSION

CFTC RELEASE 5699-09, AUGUST 20, 2009: THE CFTC (OR "COMMISSION") FILED A COMPLAINT AGAINST DEFENDANT MOHIT A. KHANNA AND HIS FIRM, ALLEGING THEY VIOLATED SECTIONS 4B(A)(2)(A)-(C) OF THE COMMODITY EXCHANGE ACT, AS AMENDED BY THE CRA, CFTC REGULATIONS 1.1(B) AND 1.2, AND CALIFORNIA CORPORATIONS CODE SECTIONS 29520 AND 29536. THE CFTC'S COMPLAINT ALLEGES THAT THE DEFENDANTS FRAUDULENTLY SOLICITED AT LEAST $16.4 MILLION FROM AT LEAST 122 INDIVIDUALS PURPORTEDLY TO TRADE FOREIGN CURRENCY (FOREX) ON THEIR BEHALF, MISUSING CLIENT FUNDS TO PAY OFF OTHER CLIENTS AND FOR PERSONAL USE, AND ISSUING FALSE STATEMENTS TO CONCEAL THEIR FRAUD AS THEY CONTINUED TO SOLICIT FUNDS. THE COMPLAINT CHARGES THAT DEFENDANTS FRAUDULENTLY SOLICITED FUNDS FROM INDIVIDUALS LOCATED PRIMARILY IN SOUTHERN CALIFORNIA BY: (1) GUARANTEEING RETURNS OF 40% TO 50%; (2) REASSURING CLIENTS THAT INVESTMENTS WITH KHANNA'S FIRM WERE PROTECTED AGAINST LOSS BY FIRM INSURANCE POLICIES; (3) CLAIMING TO HAVE $50 MILLION IN ASSETS AND AT OTHER TIMES $500 MILLION OR MORE IN ASSETS; (4) CLAIMING TO BE EXPERIENCED TRADERS WITH A CONSISTENT SIX-YEAR TRACK RECORD OF DOUBLE-DIGIT RETURNS; 5) FAILING TO ADEQUATELY DISCLOSE THE RISKS OF TRADING OFF-EXCHANGE LEVERAGED FOREIGN CURRENCY CONTRACTS; AND (6) FAILING TO DISCLOSE THAT, IN 2004, KHANNA WAS BARRED FROM ASSOCIATING WITH ANY MEMBER OF NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD), NOW KNOWN AS THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, FOR ALLEGEDLY LURING INVESTMENTS FROM CLIENTS THROUGH ALLEGED FALSE MISREPRESENTATIONS. THE COMPLAINT ALSO ALLEGES THAT DEFENDANTS HAVE NOT MET REDEMPTION REQUESTS OR RETURNED FUNDS TO MANY CLIENTS. IN LATE FEBRUARY, 2009, KHANNA TRIED TO REASSURE CLIENTS BY CLAIMING THAT HIS FIRM HAS PROSPERED FOR SIX YEARS DESPITE THE NEGATIVE MARKET CONDITIONS. KHANNA ALSO PROVIDED A LETTER FROM A PURPORTED ACCOUNTANT FOR HIS FIRM STATING THAT FIRM RECORDS SHOW $50 MILLION IN ASSETS. AT THAT TIME, FIRM BANK ACCOUNTS HAD LESS THAN $200,000. UPON INFORMATION AND BELIEF, DEFENDANTS OPERATED A "PONZI" SCHEME BY PAYING SO-CALLED RETURNS TO CLIENTS WITH THOSE CLIENTS' OWN MONEY OR THE MONEY OF OTHER CLIENTS. DEFENDANTS ALSO MISAPPROPRIATED CLIENT FUNDS FOR PERSONAL USE, INCLUDING MAKING PAYMENTS FOR SEVERAL LUXURY VEHICLES AND MORTGAGES. DEFENDANTS ALSO CHANNELED AT LEAST SOME FUNDS FROM A FIRM ACCOUNT INTO A BANK ACCOUNT IN THE NAME OF ANOTHER OF KHANNA'S BUSINESS. DEFENDANTS CONCEALED THEIR FRAUD THROUGH FALSE STATEMENTS TO CLIENTS SHOWING THE PROMISED RETURNS.

Consent

Injunction

PERMANENTLY RESTRAINED AND PROHIBITED

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SEC LITIGATION RELEASE 21181, AUGUST 20, 2009: THE SEC (OR "COMMISSION") FILED A COMPLAINT AGAINST DEFENDANT MOHIT A. KHANNA AND HIS FIRM, ALLEGING THEY VIOLATED SECTIONS 5(A), 5(C) AND 17(A) OF THE SECURITIES ACT OF 1933 ("SECURITIES ACT") AND SECTION 10(B) OF THE SECURITIES EXCHANGE ACT OF 1934 ("EXCHANGE ACT") AND RULE 10B-5 THEREUNDER. THE SEC'S COMPLAINT ALLEGES THAT THE DEFENDANTS SOLICITED INVESTORS IN SOUTHERN CALIFORNIA AND SEVERAL OTHER STATES, AS WELL AS A CHARITABLE FOUNDATION, THROUGH WORD-OF-MOUTH REFERRALS AND A WEBSITE. THE COMMISSION FURTHER ALLEGES THAT THE DEFENDANTS CLAIMED TO POOL INVESTOR FUNDS TO INVEST IN COMMERCIAL PAPER, FOREIGN CURRENCY TRADING PRODUCTS, AND OTHER GUARANTEED INVESTMENTS. THE COMPLAINT ALLEGES THAT THE INVESTMENT PRODUCTS KHANNA CLAIMED TO HAVE INVESTED IN WERE NON-EXISTENT. INSTEAD, THE COMPLAINT ALLEGES, KHANNA MISUSED INVESTOR FUNDS TO PAY FOR SEVERAL LUXURY CARS AND RESIDENTIAL PROPERTIES. THE COMMISSION'S COMPLAINT ALLEGES THAT THE DEFENDANTS FALSELY CLAIMED THAT INVESTOR ACCOUNTS WOULD BE FDIC AND SIPC INSURED AND WERE "INSURED" BY INSURANCE POLICIES PURCHASED BY THE DEFENDANTS. THE COMPLAINT ALLEGES KHANNA FABRICATED AND GAVE TO AN ACCOUNTANT A "SCREEN SHOT" OF HIS FIRM'S ONLINE BANKING ACTIVITY PURPORTING TO SHOW A BALANCE OF OVER $50 MILLION IN ITS BANK ACCOUNT. THE DEFENDANTS OBTAINED A LETTER VERIFYING THE ACCOUNT BALANCE FROM THE ACCOUNTANT WHICH WAS SENT TO INVESTORS. THE COMPLAINT ALLEGES THAT, IN REALITY, THE AVERAGE DAILY BALANCE IN THAT ACCOUNT NEVER EXCEEDED $197,000. THE COMPLAINT ALSO ALLEGES THE DEFENDANTS CONCEALED KHANNA'S FINRA-BAR WHICH RESULTED FROM UNRELATED, ALLEGED FRAUDULENT CONDUCT.

Judgment Rendered

Disgorgement

$15,148,938.41

Monetary Penalty other than Fines

Injunction

NASD

NASD CONDUCT RULE 2110 - RESPONDENT MOHIT A. KHANNA FALSELY REPRESENTED TO CUSTOMERS THAT HIS MEMBER FIRM WOULD REFUND THE SALES CHARGES WHEN MUTUAL FUND SHARES WERE SOLD. AFTER RESPONDENT KHANNA MADE THOSE FALSE REPRESENTATIONS, HIS CUSTOMERS PURCHASED APPROXIMATELY $400,000 OF ADDITIONAL MUTUAL FUND A SHARES IN THEIR ACCOUNTS. RESPONDENT KHANNA MADE THESE REPRESENTATIONS TO THE CUSTOMERS WITHOUT HIS MEMBER FIRM'S KNOWLEDGE OR CONSENT.

Acceptance, Waiver & Consent(AWC)

Bar

WITHOUT ADMITTING OR DENYING THE ALLEGATIONS, THE RESPONDENT KHANNA CONSENTED TO THE FINDING OF THE ALLEGATIONS AND TO THE FOLLOWING SANCTIONS: BARRED FROM ASSOCIATION WITH ANY NASD MEMBER IN ANY CAPACITY.