The Securities and Exchange Commission (SEC) has launched an investigation into allegations of fraudulent investment practices involving a 29-year-old man named Solomon Lichtenstein. He is accused of deceiving investors regarding the use of their funds, fabricating reports on investment returns, and misappropriating their investments for his personal gain.
According to documents submitted to the Southern District Court of New York on October 22, 2025, Lichtenstein is alleged to have raised more than $2.7 million from over 25 individuals, including many close acquaintances, between July 2022 and August 2024. The fundraising was conducted through two entities, Taraxa Capital Fund, LP, a pooled investment vehicle, and Lightstone Trading Inc.
Lichtenstein claimed he would manage the funds as an investment adviser to Taraxa, portraying it as a hedge fund utilizing a day-trading strategy from which he personally profited. Similarly, he indicated that investors in Lightstone would benefit from this trading approach but guaranteed them fixed monthly interest payments of 5%, which he purported would stem from his trading successes.
However, the SEC contends that Lichtenstein misappropriated substantial amounts of the capital he raised, spending hundreds of thousands of dollars on personal expenses such as credit card bills, mortgage payments, leisure activities, travel, and cash withdrawals. Approximately $868,000 was taken from Taraxa, and about $98,000 was misappropriated from Lightstone for these purposes.
Moreover, results from Lichtenstein’s trading activities were dismal. The overall trading efforts led to net losses of around $200,000. Instead of being transparent with his investors about these losses, Lichtenstein allegedly created false online dashboards that displayed fictitious positive investment growth, misleading investors about their financial status.
By the summer of 2024, Lichtenstein’s fraudulent scheme unraveled as he expended all available investor funds and ultimately confessed to several investors about using their contributions for his personal expenses. Collectively, investors faced losses exceeding $1.5 million due to Lichtenstein’s actions.
The SEC has charged him with violating multiple sections of U.S. securities laws, including aspects of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The complaint seeks several remedies, including:
1. A permanent injunction to prevent Lichtenstein from engaging in the outlined fraudulent practices and violating federal securities laws.
2. Restrictions on his ability to participate in security transactions, though he would still be permitted to buy or sell securities for his personal accounts.
3. A ban on him acting as or being affiliated with any investment adviser.
4. An order for him to return all illicit gains from his violations along with interest.
5. Civil monetary penalties as authorized under relevant sections of the securities laws.
6. Any additional relief deemed just and appropriate by the court.
This case highlights serious concerns within investment practices, particularly regarding transparency and fiduciary responsibility. The SEC’s actions underscore their commitment to safeguarding investors and maintaining the integrity of the financial markets.