SEC v. PANNON INVESTMENT ADVISORS LLC; and DUSAN VARGA, No. 1:24-cv-24241, Southern District of Florida (Oct. 31, 2024) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO.

SECURITIES AND EXCHANGE COMMISSION,

   Plaintiff,

v.

PANNON INVESTMENT ADVISORS LLC and
DUSAN VARGA,

   Defendants.
                                                                                       /

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF
 Plaintiff Securities and Exchange Commission (the “Commission”) alleges:
I. INTRODUCTION
1. From May 2020 to at least January 2024, Defendants Dusan Varga (“Varga”) and
Pannon Investment Advisors LLC (“Pannon”) (collectively, “Defendants”), raised approximately
$1.6 million from at least 20 investors, primarily of Serbian origin residing in South Florida and
abroad, through a series of unregistered and fraudulent offerings.
2. Defendants  solicited  investments  in  securities  through investment agreements  to
invest in the Pannon Risk-Managed Income Fund (“Pannon Fund”), a purported investment fund
managed by Defendants.  Defendants misrepresented that the Pannon Fund traded covered stock
options to generate high income while managing downside risk, while promising investors fixed
returns in the form of dividends of 3% or 4% a month.
3. Defendants used a combination of phone calls, text messages, WhatsApp messages,
emails,   in-person   meetings,   Zoom   meetings,   and   written   documents   to   solicit   investors.

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Defendants also solicitated investors via a referral program under which they paid referral fees to
existing investors for referring new investors to invest in the Pannon Fund, Defendants’ client.
4. Defendants made numerous material misrepresentations about the use of investor
and  client  funds,  the  profitability  of  Pannon’s  trading,  Varga’s  purported background  as  a
registered representative of a broker-dealer, and the safety of investing with the Pannon Fund.  For
example, Defendants  falsely  represented  to  investors  that,  upon  their  demand,  investors  could
receive a full return of their principal funds within a few business days and that investors’ principal
funds were matched in an escrow account to ensure the liquidity of their investments.
5. In reality, there was no escrow account,  Defendants made Ponzi-like payments to
investors,  and  Varga  misappropriated  and  commingled  investor  and  client  funds in his  own
personal bank and brokerage accounts.  Rather than using investor and client funds to consistently
trade covered  stock  options  as  promised  to  investors,  Defendants  often  engaged  in  riskier,
uncovered options trading that ultimately resulted in aggregate trading losses of over $200,000.
6. The  scheme  unraveled  during  the  last  quarter  of  2023, when  Varga  and  Pannon
stopped  making  dividend payments  to  investors,  initially  blaming  the  delay  in  payment  on
processing issues with online bill pay services and banks.  Despite numerous redemption requests
by investors, Varga and Pannon have failed to return investors’ principal funds.
7. By  engaging  in  this  conduct,  Varga  and  Pannon violated  Sections  5(a), 5(c)  and
17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and (c) and 77q(a)],
and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)]
and  Rule  10b-5  thereunder  [17  C.F.R.  §  240.10b-5].    Varga  and Pannon also  violated  Sections
206(1), 206(2), and 206(4) and Rule 206(4)-8 thereunder of the Investment Advisers Act of 1940

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(“Advisers Act”) [15 U.S.C. §§ 80b-6(1), (2), and (4) and 17 C.F.R. § 275.206(4)-8)] and breached
the fiduciary duties they owed to their advisory client, the Pannon Fund.
8. Unless  enjoined,  Defendants  will  continue  to  violate  the  federal  securities  laws.
The Commission seeks injunctive relief, as well as disgorgement with prejudgment interest, and
civil penalties against Defendants.  The Commission also seeks an order imposing an officer and
director bar against Varga.
II. DEFENDANTS AND RELATED ENTITIES

A. Defendants

9. Pannon is a Florida limited liability company formed in September 2020 with its
principal place of business in Miami, Florida.  Varga solely manages, owns and controls Pannon.
Pannon acted as an investment adviser managing and raising funds for the Pannon Fund, which
purported to trade covered stock options using a protective net-credit collar strategy to generate
high  income  while  reducing  downside  risk.
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    Pannon has  never  been  registered  with  the
Commission or held any securities licenses.
10. Varga  is  a  dual  Serbian  and  Canadian  citizen  residing  in  Miami,  Florida  who,
during the offerings, operated Pannon from Miami, Florida.  Varga solely manages, owns, controls,
and  is  the  Chief  Executive  Officer  (“CEO”)  and  Chairman  of  Pannon.    Varga  is  also the  sole
signatory on Pannon’s bank account and controlled Pannon’s investments.  Varga has never been
registered with the Commission or held any securities licenses.

1
  A protective net-collar trading strategy involves ownership of an underlying equity security, sale of a call
option on such security (i.e., a covered call), and purchase of a put option on the same security (i.e., a
protective  put).    This  strategy  aims  to  hedge  the  risk  of  holding  an  underlying  equity  security  through
options trading.  A covered collar strategy can also be used to generate income when a trader expects
volatility to remain muted throughout the near term.

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III. JURISDICTION AND VENUE
11. The  Court  has  jurisdiction  over  this  action  pursuant  to  Sections  20(b),  20(d)  and
22(a)  of  the  Securities  Act  [15  U.S.C.  §§ 77t(b),  77t(d),  and  77v(a)];  Sections  21(d),  21(e)  and
27(a)  of  the  Exchange  Act  [15  U.S.C.  §§  78u(d),  78u(e)  and  78aa(a)],  and  Sections  209(d)  and
214(a) of the Advisers Act [15 U.S.C. §§ 80b-9(d) and 80b-14(a)].
12. This Court has personal jurisdiction over the Defendants and venue is proper in the
Southern  District  of  Florida  pursuant  to  Section  22(a)  of  the  Securities  Act  [15  U.S.C.  §  77v],
Section 27 of the Exchange Act [15 U.S.C. § 78aa], and Section 214(a) of the Advisers Act [15
U.S.C. § 80b-14(a)] because, among other things, during the time of the violative conduct alleged
herein: (i) Varga resided in Miami, Florida; and (ii) Defendants transacted business or engaged in
the violative conduct at issue in this District.  In particular, Pannon maintained an office in this
District and Varga conducted, supervised, and managed all aspects of Pannon’s business from this
District, including meeting with, soliciting, and selling interests in the Pannon Fund to investors
and thereafter communicating with those investors, many of whom reside in this District.
13. In connection with the conduct alleged in this Complaint, Defendants, directly and
indirectly, singly or in concert with others, made use of the means or instrumentalities of interstate
commerce, the means or instruments of transportation or communication in interstate commerce,
or the mails.
IV. DEFENDANTS’ ACTS IN VIOLATION OF THE SECURITIES LAWS

A. Defendants’ Unregistered Securities Offering and Investment Adviser
Services
14. From approximately May 2020 to January 2024, Varga and Pannon engaged in the
offer and sale of unregistered securities in the form of investment contracts for investments in the
Pannon Fund for which they served as investment advisers.  Defendants represented to prospective

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and actual investors that their funds would be pooled to buy and sell covered options contracts on
stocks using a protective net-credit collar strategy.  Defendants primarily solicited unsophisticated
investors  of  Serbian  origin  residing  in  South  Florida,  with  others  located  in  Serbia,  New  York,
Luxembourg, and the Czech Republic.
15. Varga and Pannon solicited investors in several ways.  Defendants offered Pannon
Fund  investments  through  telephone,  text  messages,  WhatsApp  messages,  emails,  in-person
meetings,  and  Zoom  meetings.  Defendants  also engaged  in  general  solicitation  via  a  Pannon
referral  program  under  which  they  paid  referral  fees  to  existing  investors  for  referring  new
investors with whom Varga and Pannon had no preexisting relationships.  Defendants did not take
reasonable  steps  to  verify  whether  the  Pannon  Fund’s  prospective  or  actual  investors  were
accredited, and many were, in fact, unaccredited, including first-time investors.
16. Defendants  provided  investors  with  written documents,  including  investment
agreements  and  account  statements,  documenting investments  in  the  Pannon  Fund. Varga,  on
behalf of Pannon, signed and issued the investment agreements.
17. Early  versions  of  the  investment agreement  included  the  phrase  “Stock  Broker
Agreement” in the title of the agreement.  As the fraud progressed, Defendants subsequently sent
new  investors  agreements  they  titled  as  the  “Pannon  Risk-Managed  Income  Fund  Investment
Agreement.”    Defendants  represented  to  investors  verbally  and  in  writing,  and  investors
understood, that signing an investment agreement would allow them to participate in the Pannon
Fund.
18. At  least  as  early  as  February  2023,  Defendants  included  a  provision  in  some
investment agreements to the effect that investors’ original deposited funds would be matched in
an escrow account.

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19. Defendants emailed investors in the Pannon Fund quarterly and annual “Investor
Balance  Detail”  account statements  through  at  least  the  first  quarter  of  2023.    These  account
statements purported to show individual investors “all [of their] investor deposits from the initial
investment into the fund,” their “current total investor fund participation balance,” and dividend
payments through the date of the statements.
20. Defendants also sent several investors additional documents describing the Pannon
Fund and its trading strategy, including quarterly factsheets and a “white paper.”
21. The   factsheets   outlined   the   Pannon   Fund’s   four-step “Investment   strategy
overview”  under  which  the  fund  purportedly would:    (i)  purchase  all  underlying  stocks  in  the
Nasdaq-100 Index; (ii)   deploy a rule-based options collar strategy; (iii) distribute monthly income
from options premiums; and (iv) on the investors’ request, use their monthly income to reinvest in
the  fund.    The  factsheets  marketed  the  Pannon  Fund  as  “[a]n  income  solution  that  targets  high
current income with less risk.”
22. In these materials, Defendants promoted the Pannon Fund’s use of a “constant, fully
financed market hedge that seeks to reduce downside risk” and Defendants’ “rules-based options
trading strategy that seeks to produce high income using the Nasdaq-100 Index equities.”
23. In their so-called “white paper,” Defendants further described the Pannon Fund’s
investing methodology as a protective net-credit collar strategy.  The Defendants also reiterated
the Pannon Fund’s four-step investment overview as follows:

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24. Through the  factsheets  and  “white  paper,”  Defendants  held  themselves  out  as
providing and, in fact, did provide, securities investment advice to the Pannon Fund.  Defendants
advised and made investment decisions for the Pannon Fund by trading securities in the form of
stocks and stock options for the Pannon Fund and received compensation through misappropriated
funds.  As the sole owner, principal, and manager of Pannon, an unregistered investment adviser,
Varga controlled Pannon and its advice to the Pannon Fund concerning its investments in stocks
and stock options.  By advising the Pannon Fund as to the value and advisability of investing in,

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purchasing, and selling stocks and stock options for compensation, Defendants acted as investment
advisers within the meaning of the Advisers Act to the Pannon Fund.
25. Defendants failed to provide investors with sufficient financial information about
the Pannon Fund.  The factsheets, for example, contained only basic financial information about
the Pannon Fund such as the fund’s quarterly balance and purported profits.  None of the materials
Defendants sent to investors contained financial statements for the Pannon Fund.
26. Investors completely depended on Defendants to make successful investments to
generate  investment  returns,  to  pay  the  specified  interest,  and  to  return  the  investors’  principal.
Defendants  exercised  exclusive  control  over  investors’  funds,  including  making  all  investment
decisions purportedly generating investor returns.  The investors understood they were making a
passive  investment  in  the  Pannon  Fund  and  that  profits  were  going  to  be  generated  by  the
Defendants’ efforts.
27. The  investment  agreements  for  interests  in  the  Pannon  Fund  sold  by Varga  and
Pannon are securities within the meaning of the Securities Act, the Exchange Act, and the Advisers
Act because they are investment contracts.  The investment agreements are investment contracts
because: (i) they were sold to investors for money; (ii) investors were dependent upon the expertise
or efforts of the Defendants; (iii) investors expected to profit from the investment agreements; and
(iv) all investor profits were to be generated by Defendants’ efforts.
28. No registration statement was filed with the Commission pursuant to the Securities
Act relating  to  the  investments  contracts Defendants  offered  and  sold,  and  no  exemption  from
registration existed with respect to the Pannon Fund offering.

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B. Defendants’ Materially False and Misleading Omissions and Misstatements

29. Defendants knowingly made,  both  orally  and  in  writing, materially  false  and
misleading statements and omissions to investors and the Pannon Fund about, among other things:
(i) the use of investor funds; (ii) the profitability and safety of investing in the Pannon Fund; and
(iii) Varga’s purported background as a registered representative of a broker-dealer.
(1) Materially False and Misleading Statements Regarding Use of Funds

30. Defendants misrepresented to investors and their client, the Pannon Fund, in written
factsheets and a “white paper” that their funds would be pooled in the Pannon Fund to buy and sell
covered  options  contracts  on  stocks  using  a  protective  net-credit  collar  strategy.    Investors
understood from Defendants’ representations that this trading strategy was employed to maximize
profitability  and  minimize  risk.  These  representations  concerning  the  use  of  investor  and  client
funds were materially false and misleading because, among other things, Defendants commingled
investor and client funds, and used those funds to: (i) pay Varga’s personal expenses; (ii) make
Ponzi-like payments to other investors; and (iii) employ riskier options trades than were disclosed
to investors.
31. Although Defendants  pooled investor  funds  to  make  some  trades of stocks   and
stock options  for  the  purported  Pannon  Fund,  funds  were  pooled  and  commingled in  Varga’s
personal brokerage account, as well as a brokerage account Varga eventually opened in the name
of Pannon in September 2021, to make those trades.    Varga also commingled investor funds with
his own funds in his personal bank accounts.
32. Next,  in  or  about  September  2021,  Defendants  linked  a  debit  card  to  Pannon’s
brokerage account and began using that card to pay for Varga’s personal expenses.  Varga, who
signed the debit card application in his capacity as Pannon’s agent, used the card to pay for personal

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expenses.  Varga also paid for personal expenses with investor funds by making ACH electronic
transfers and Bill Pay payments from the Pannon brokerage account.
33. Defendants used investor funds to pay at least: $64,200 in credit card bills, $40,000
for auto related expenses, $24,300 for personal and luxury goods, $15,400 in tuition expenses for
private school, $4,600 for tennis lessons,  and $2,900 to nail and wax salons.  Of the approximately
$1.6 million raised by Defendants, Defendants misappropriated at least $260,300 of investor funds
for Varga’s personal use.
34.   Defendants also used at  least  $53,000 to  make Ponzi-like payments  to  other
investors.    For  example,  on  August  1,  2022,  an investor  deposited  $25,000  into  Pannon’s  bank
account.    Within  a  little  over  a  week  of  receiving  the  funds,  Defendants  used  approximately
$12,000 of those funds to pay 8 other investors.
35. Finally,  Defendants  did  not  use  the  trading  strategy  promised  and  disclosed  to
investors.  As disclosed to investors, Defendants should have utilized a protective net-credit collar
strategy by consistently buying the underlying equity securities of their options trades.  The actual
trading of the Pannon Fund rarely employed this strategy.  Instead, Defendants mostly traded in
vertical  option  spreads  for  the  Pannon  Fund,  which  are  considerably  riskier  than  the  protective
collar  strategy  that  was  disclosed  to  investors.    In  fact,  the  vast  majority  of  the  Pannon  Fund’s
positions  involved  trading  options  without  owning  the  underlying  asset.  The  Defendants  never
disclosed the riskier trading strategy they actually used for the Pannon Fund.
36. Varga  and  Pannon  knew,   or were  reckless  in  not  knowing, each  of  these
misstatements  and  omissions  were false  and  misleading  because  Varga,  through  his  exclusive
control of Pannon, was solely responsible for the management of the Pannon Fund, including the
selection  and  disposition  of  options  contract  investments,  and  he controlled all  the  bank  and

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brokerage  accounts  from  which  the  Pannon  Fund’s  assets  were  deposited,  commingled  and
misappropriated or used to pay several investors through Ponzi-like payments.
(2) Profitability and Safety of the Investment
37. Defendants also attracted investors to invest in the Pannon Fund using several false
promises of profitability and safety, each of which they knew, or were reckless in not knowing,
were materially false and misleading.
38. First, Defendants  represented  that  their  net-credit  collar  trading  strategy  would
generate profits sufficient to support high monthly returns to investors while minimizing potential
losses.  Defendants promised most of their investors fixed monthly dividends of 3% to 4% a month,
even though the risky trading strategies they employed led to trading losses of over $200,000.
39. Defendants knew, or were reckless in not knowing, they could not sustain the fixed
returns of 3% to 4% they promised investors in light of their exclusive control of the Pannon Fund
and history of unprofitable trading.  Specifically, from December 2019 through May 2020, Varga
traded in his personal account using the same vertical options trading strategy that he employed
when trading on behalf of the Pannon Fund.  For most of that period, Varga traded on his own
behalf and began trading with investor funds in May 2020.  Varga’s trading in that account led to
cumulative losses starting in December 2019 through May 2020.
40. Accordingly,  as  early  as  December  2019,  Varga  knew,  or  was  reckless  in  not
knowing, the  trading  strategy  he ultimately  used  for  the  Pannon  Fund  would  not  generate
consistent  monthly  profits  sufficient  to  satisfy  the  monthly  dividends  he  promised.   Varga’s
knowledge that the promised, fixed dividends were unsustainable is imputed to Pannon because
Varga was at all relevant times Pannon’s control person and Chief Executive Officer.

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41. Despite this knowledge, Varga and Pannon continued to solicit investments in the
Pannon  Fund  by  promising  unsustainable,  fixed  monthly  dividends  to  investors,  even  after
experiencing continued losses.    From  July  2021  through  December  2021,  the  Pannon  Fund
experienced  a  sequence  of  six months  of  trading  losses,  followed  by  further  losses  in  the  first
quarter of 2022.  Given the losses and previously paid dividends to investors, the Pannon Fund
could not sustain the promised monthly dividend payments to investors starting approximately as
early as November 2021.
42. Defendants also made several misrepresentations concerning the safety of investing
in  the  Pannon  Fund.    Verbally  and  in  writing in  the  investment  agreements,  Defendants  told
investors that they could demand a full or partial withdrawal of their funds at any time and receive
their funds within a few business days, typically 3 to 15 days.  Despite redemption requests from
several  investors,  Defendants  have  failed  to  return  their principal  funds  months  after  they
submitted their requests.
43. Defendants further represented to several investors verbally and in several versions
of  the  investment  agreements  that  Pannon  was  ensuring  the  liquidity  of  their  investment  by
matching the investors’ deposited funds in a separate escrow account.  Multiple investors signed
investment agreements providing that Pannon would put funds matching the investors’ deposited
funds in an escrow account.  The promised escrow account did not exist.
44.   Defendants  stopped  paying  dividends  to  several  investors  starting  in  the  last
quarter of 2023, initially blaming the delay in payment on processing issues with online bill pay
services and banks.  Unable to meet their obligations to investors, Defendants eventually stopped
returning investor calls, messages, and emails.

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45. Defendants knew, or were reckless in not knowing, that each of the representations
detailed above were false and misleading in light of their exclusive control over the disbursement
of investor dividends and control over the accounts in which investor and client funds associated
with the Pannon Fund were held.  Defendants further knew, or were reckless in not knowing, that
each of the representations discussed above was false because Defendants had exclusive control
over  the  brokerage  accounts  used  to  trade  on  behalf  of  the  Pannon  Fund,  and Defendants  were
aware of their misuse and misappropriation of the investor and client funds.
(3) Varga’s Lies About His Background
46. In   soliciting   investments,   Varga told   investors   that   he   was   a   registered
representative of a broker-dealer.  This statement was false, as Varga has never been registered or
associated with a registered broker-dealer.
47. Varga’s   false  statements  to  investors  about  his  registration  status  was  important,
especially to investors who had little investment experience and who relied on Varga’s purported
experience as a licensed broker.  Varga’s misrepresentation that he was a registered representative
lulled inexperienced  investors  into  trusting  Varga  and  Pannon  with  their  hard-earned  money,
including funds  earmarked  for  retirement,  to  purchase  a  home,  or  pay  college  tuition  for  their
children.
48. All of the misrepresentations set forth herein, individually and in the aggregate, are
material.    A reasonable  investor  would  consider  material the  misrepresented  and  omitted  facts
regarding how their money would be invested, the profitability and safety of those investments,
the  misuse  and  misappropriation  of  investor  funds,  and  misrepresentation  that  Varga  was  a
registered representative of a broker-dealer.

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V. CLAIMS FOR RELIEF
COUNT I
Violations of Sections 5(a) and 5(c) of the Securities Act
49. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
50. No registration statement was filed or in effect with the Commission pursuant to
the Securities Act with respect to the securities issued by Varga and Pannon as described in this
Complaint, and no exemption from registration existed with respect to these securities.
51. From  approximately  May  2020 until  at  least  January  2024, Varga  and  Pannon,
directly and indirectly:
a. made   use   of   any   means   or   instruments   of   transportation   or
communication  in  interstate  commerce  or  of  the  mails  to  sell
securities, through the use or medium of a prospectus or otherwise;

b. carried  or  caused  to  be  carried  securities  through  the  mails  or  in
interstate commerce, by any means or instruments of transportation,
for the purpose of sale or delivery after sale; or

c. made   use   of   any   means   or   instruments   of   transportation   or
communication in interstate commerce or of the mails to offer to sell
or  offer  to  buy  through  the  use  or  medium  of  any  prospectus  or
otherwise any security,

without  a  registration  statement  having  been  filed  or  being  in  effect  with  the  Commission  as  to
such securities.
52. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and,
unless enjoined, are reasonably likely to continue to violate Sections 5(a) and 5(c) of the Securities
Act [15 U.S.C. §§ 77e(a) and 77e(c)].

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COUNT II
Violations of Section 17(a)(1) of the Securities Act
53. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
54. From approximately May 2020 until at least January 2024, Varga and Pannon, in
the  offer  or  sale  of  securities  by  use  of  the  means  or  instruments  of  transportation  or
communication in interstate commerce or by use of the mails, directly or indirectly, knowingly or
recklessly employed devices, schemes or artifices to defraud.
55. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and
unless enjoined, are reasonably likely to continue to violate, Section 17(a)(1) of the Securities Act
[15 U.S.C. § 77q(a)(1)].
COUNT III
Violations of Section 17(a)(2) of the Securities Act
56. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
57. From approximately May 2020 until at least January 2024, Varga and Pannon, in
the  offer  or  sale  of  securities  by  use  of  the  means  or  instruments  of  transportation  or
communication in interstate commerce or by use of the mails, directly or indirectly, negligently
obtained money or property by means of untrue statements of material facts or omissions to state
material facts necessary to make the statements made, in light of the circumstances under which
they were made, not misleading.
58. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and
unless enjoined, are reasonably likely to continue to violate, Section 17(a)(2) of the Securities Act
[15 U.S.C. § 77q(a)(2)].

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COUNT IV
Violations of Section 17(a)(3) of the Securities Act
59. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
60. From approximately May 2020 until at least January 2024, Varga and Pannon, in
the  offer  or  sale  of  securities  by  use  of  the  means  or  instruments  of  transportation  or
communication in interstate commerce or by use of the mails, directly or indirectly, negligently
engaged in transactions, practices, and courses of business which have operated as a fraud or deceit
upon the purchasers.
61. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and
unless enjoined, are reasonably likely to continue to violate, Section 17(a)(3) of the Securities Act
[15 U.S.C. § 77q(a)(3)].
COUNT V
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a)
62. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
63. From  approximately  May  2020  until  at  least  January  2024,  Varga  and  Pannon,
directly or indirectly, by use of the means and instrumentalities of interstate commerce, or of the
mails, knowingly or recklessly employed devices, schemes or artifices to defraud in  connection
with the purchase or sale of securities.
64. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and
unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5(a) [17 C.F.R. § 240.10b-5(a)] thereunder.

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COUNT VI
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b)
65. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
66. From  approximately  May  2020  until  at  least  January  2024,  Varga  and  Pannon,
directly or indirectly, by use of the means and instrumentalities of interstate commerce, or of the
mails, in connection with the purchase or sale of securities, knowingly or recklessly made untrue
statements  of  material  facts  or  omitted  to  state  material  facts  necessary  in  order  to  make  the
statements made, in light of the circumstances under which they were made, not misleading.
67. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and
unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder.
COUNT VII
Violations of Section 10(b) of the Exchange Act and Rule 10b-5(c)
68. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
69. From May  2020  until  at  least  January  2024,  Varga  and  Pannon,  directly  or
indirectly, by use of the means and instrumentalities of interstate commerce, or of the mails, in
connection  with  the  purchase  or  sale  of  securities,  knowingly  or  recklessly  engaged  in  acts,
practices,  and  courses  of  business  which  have operated  as  a  fraud  upon  the  purchasers  of  such
securities.
70. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and,
unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act
[15 U.S.C. § 78j(b)] and Rule 10b-5(c) [17 C.F.R. § 240.10b-5(c)] thereunder.

18

COUNT VIII
Violations of Section 206(1) of the Advisers Act
71. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint.
72. From approximately May 2020 until at least January 2024, Varga and Pannon, for
compensation, engaged in the business of directly advising others as to the value of securities or
as  to  the  advisability  of  investing  in,  purchasing,  or  selling  securities.    Varga  and  Pannon were
therefore “investment advisers” within the meaning of Section 202(a)(11) of the Advisers Act [15
U.S.C. § 80b-2(a)(11)].
73. Varga  and  Pannon, by  the  use  of  the  mails  or  any  means  or  instrumentality  of
interstate commerce, directly or indirectly, knowingly or recklessly employed a device, scheme,
or artifice to defraud one or more clients or prospective clients.
74. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are
reasonably likely to continue to violate Section 206(1) of the Advisers Act [15 U.S.C. § 80b-6(1)].
COUNT IX
Violations of Section 206(2) of the Advisers Act
75. The  Commission  repeats  and  realleges  Paragraphs  1  through  48,  and  Paragraphs
71-72 of this Complaint.
76. From approximately May 2020 until at least January 2024, Varga and Pannon, by
the use of the mails or any means or instrumentality of interstate commerce, directly or indirectly,
negligently engaged in transactions, practices, or courses of business which operated   as a fraud or
deceit upon one or more clients or prospective clients.
77. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are
reasonably likely to continue to violate Section 206(2) of the Advisers Act [15 U.S.C. § 80b-6(2)].

19

COUNT X
Violations of Section 206(4) and Rule 206(4)-8(a)(1) of the Advisers Act
78. The  Commission  repeats  and  realleges  Paragraphs  1  through  48,  and Paragraphs
71-72 of this Complaint.
79. Pannon  Fund was  a  “pooled  investment  vehicle[]”   within  the  meaning  of  Rule
206(4)-8(b) of the Advisers Act.
80. From  approximately  May  2020  until  at  least  January  2024,  Varga  and  Pannon,
directly  or  indirectly,  negligently  made  untrue  statements  of  material  facts  and  omitted  to  state
material facts necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading, to investors or prospective investors in Pannon Fund.
81. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are
reasonably likely to continue to violate Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)],
and Advisers Act Rule 206(4)-8(a)(1) [17 C.F.R. 275.206(4)-8(a)(1)].
COUNT XI
Violations of Section 206(4) and Rule 206(4)-8(a)(2) of the Advisers Act
82. The Commission repeats and realleges Paragraphs 1 through 48 and Paragraphs 72
and 79 of this Complaint.
83. From  approximately  May  2020  until  at  least  January  2024,  Varga  and  Pannon,
directly  or  indirectly,  negligently  engaged  in  acts, practices,  or  course  of  business  that  were
fraudulent,  deceptive,  or  manipulative  with  respect  to investors  and/or  prospective  investors  in
Pannon Fund.
84. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are
reasonably likely to continue to violate Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)],
and Advisers Act Rule 206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)].

20

VI. RELIEF REQUESTED
The Commission respectfully requests the Court find that the Defendants committed the
foregoing violations, and:
A. Permanent Injunction
Issue a permanent injunction enjoining Varga and Pannon and its officers, agents, servants,
employees, attorneys, and all persons in active concert or participation with them and each of them,
from violating Sections  5(a),  5(c),  and 17(a) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c),
and 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R.
§ 240.10b-5] thereunder; and further enjoining Varga and Pannon from violating Sections 206(1),
206(2), and 206(4) and Rule 206(4)-8(a) thereunder of the Advisers Act [15 U.S.C. §§ 80b-6(1),
80b-6(2), and 80b-6(4), and 17 C.F.R. § 275.206(4)-8(a)].
B. Disgorgement and Prejudgment Interest
Issue  an  order  directing  Varga  and  Pannon  to  disgorge  all  ill-gotten  gains  or  proceeds
received,  with  prejudgment  interest  thereon,  resulting  from  the  acts  and/or  courses  of  conduct
complained in this Complaint.
C. Civil Monetary Penalties
Issue an order directing Varga and Pannon to pay civil money penalties pursuant to Section
20(d)  of  the  Securities  Act  [15  U.S.C.  §  77t(d)], Section  21(d)  of  the  Exchange  Act  [15  U.S.C.
§ 78u(d)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].
D. Officer and Director Bar Against Varga
Issue  an  order pursuant  to  Section  20(e)  of  the  Securities  Act  [15  U.S.C.  § 77t(e)]  and
Section  21(d)(2)  of  the  Exchange  Act  [15  U.S.C.  § 78u(d)(2)],  permanently  prohibiting  Varga
from  acting  as  an  officer  or  director  of  any  issuer  whose  securities  are  registered  with  the

21

Commission pursuant to Section 12 of the Exchange Act or which is required to file reports with
the Commission pursuant to Section 15(d) of the Exchange Act.
E. Further Relief
Grant such other and further relief as may be necessary and appropriate.
F. Retention of Jurisdiction
Further,  the  Commission  requests  the  Court  retain  jurisdiction  over  this  action  and  over
Defendants in order to implement and carry out the terms of all orders that may hereby be entered,
or to entertain any suitable application or motion by the Commission for additional relief within
the jurisdiction of this Court.

Dated:  October 30, 2024              Respectfully submitted,
                 s/ Christine Nestor
      Christine Nestor, Esq.
Senior Trial Counsel
Florida Bar No. 597211
Direct Dial: (305) 982-6367
Email: [email protected]

      ATTORNEY FOR PLAINTIFF
SECURITIES AND EXCHANGE
COMMISSION
      801 Brickell Avenue, Suite 1950
      Miami, FL 33131
      Telephone: (305) 982-6300
      Facsimile: (305) 536-4154

Of counsel:

Melika Hadziomerovic, Esq.
Counsel
Securities and Exchange Commission
801 Brickell Avenue, Suite 1950
Miami, Florida 33131
Telephone: (305) 416-6277

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF FLORIDA 

 
CASE NO. 

 
SECURITIES AND EXCHANGE COMMISSION, 
 
   Plaintiff, 
 
v. 
 
PANNON INVESTMENT ADVISORS LLC and  
DUSAN VARGA, 
 
   Defendants. 
                                                                                       / 
 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF 

 Plaintiff Securities and Exchange Commission (the “Commission”) alleges: 

I. INTRODUCTION 

1. From May 2020 to at least January 2024, Defendants Dusan Varga (“Varga”) and 

Pannon Investment Advisors LLC (“Pannon”) (collectively, “Defendants”), raised approximately 

$1.6 million from at least 20 investors, primarily of Serbian origin residing in South Florida and 

abroad, through a series of unregistered and fraudulent offerings.  

2. Defendants solicited investments in securities through investment agreements to 

invest in the Pannon Risk-Managed Income Fund (“Pannon Fund”), a purported investment fund 

managed by Defendants.  Defendants misrepresented that the Pannon Fund traded covered stock 

options to generate high income while managing downside risk, while promising investors fixed 

returns in the form of dividends of 3% or 4% a month. 

3. Defendants used a combination of phone calls, text messages, WhatsApp messages, 

emails, in-person meetings, Zoom meetings, and written documents to solicit investors.  

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Defendants also solicitated investors via a referral program under which they paid referral fees to 

existing investors for referring new investors to invest in the Pannon Fund, Defendants’ client.   

4. Defendants made numerous material misrepresentations about the use of investor 

and client funds, the profitability of Pannon’s trading, Varga’s purported background as a 

registered representative of a broker-dealer, and the safety of investing with the Pannon Fund.  For 

example, Defendants falsely represented to investors that, upon their demand, investors could 

receive a full return of their principal funds within a few business days and that investors’ principal 

funds were matched in an escrow account to ensure the liquidity of their investments.  

5. In reality, there was no escrow account, Defendants made Ponzi-like payments to 

investors, and Varga misappropriated and commingled investor and client funds in his own 

personal bank and brokerage accounts.  Rather than using investor and client funds to consistently 

trade covered stock options as promised to investors, Defendants often engaged in riskier, 

uncovered options trading that ultimately resulted in aggregate trading losses of over $200,000. 

6. The scheme unraveled during the last quarter of 2023, when Varga and Pannon 

stopped making dividend payments to investors, initially blaming the delay in payment on 

processing issues with online bill pay services and banks.  Despite numerous redemption requests 

by investors, Varga and Pannon have failed to return investors’ principal funds.  

7. By engaging in this conduct, Varga and Pannon violated Sections 5(a), 5(c) and 

17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77e(a) and (c) and 77q(a)], 

and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b)] 

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].  Varga and Pannon also violated Sections 

206(1), 206(2), and 206(4) and Rule 206(4)-8 thereunder of the Investment Advisers Act of 1940 

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(“Advisers Act”) [15 U.S.C. §§ 80b-6(1), (2), and (4) and 17 C.F.R. § 275.206(4)-8)] and breached 

the fiduciary duties they owed to their advisory client, the Pannon Fund.   

8. Unless enjoined, Defendants will continue to violate the federal securities laws.  

The Commission seeks injunctive relief, as well as disgorgement with prejudgment interest, and 

civil penalties against Defendants.  The Commission also seeks an order imposing an officer and 

director bar against Varga.  

II. DEFENDANTS AND RELATED ENTITIES 
 
A. Defendants 
 
9. Pannon is a Florida limited liability company formed in September 2020 with its 

principal place of business in Miami, Florida.  Varga solely manages, owns and controls Pannon.  

Pannon acted as an investment adviser managing and raising funds for the Pannon Fund, which 

purported to trade covered stock options using a protective net-credit collar strategy to generate 

high income while reducing downside risk.1  Pannon has never been registered with the 

Commission or held any securities licenses. 

10. Varga is a dual Serbian and Canadian citizen residing in Miami, Florida who, 

during the offerings, operated Pannon from Miami, Florida.  Varga solely manages, owns, controls, 

and is the Chief Executive Officer (“CEO”) and Chairman of Pannon.  Varga is also the sole 

signatory on Pannon’s bank account and controlled Pannon’s investments.  Varga has never been 

registered with the Commission or held any securities licenses. 

  

 
1  A protective net-collar trading strategy involves ownership of an underlying equity security, sale of a call 

option on such security (i.e., a covered call), and purchase of a put option on the same security (i.e., a 
protective put).  This strategy aims to hedge the risk of holding an underlying equity security through 
options trading.  A covered collar strategy can also be used to generate income when a trader expects 
volatility to remain muted throughout the near term. 

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III. JURISDICTION AND VENUE 

11. The Court has jurisdiction over this action pursuant to Sections 20(b), 20(d) and 

22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), and 77v(a)]; Sections 21(d), 21(e) and 

27(a) of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e) and 78aa(a)], and Sections 209(d) and 

214(a) of the Advisers Act [15 U.S.C. §§ 80b-9(d) and 80b-14(a)]. 

12. This Court has personal jurisdiction over the Defendants and venue is proper in the 

Southern District of Florida pursuant to Section 22(a) of the Securities Act [15 U.S.C. § 77v], 

Section 27 of the Exchange Act [15 U.S.C. § 78aa], and Section 214(a) of the Advisers Act [15 

U.S.C. § 80b-14(a)] because, among other things, during the time of the violative conduct alleged 

herein: (i) Varga resided in Miami, Florida; and (ii) Defendants transacted business or engaged in 

the violative conduct at issue in this District.  In particular, Pannon maintained an office in this 

District and Varga conducted, supervised, and managed all aspects of Pannon’s business from this 

District, including meeting with, soliciting, and selling interests in the Pannon Fund to investors 

and thereafter communicating with those investors, many of whom reside in this District.   

13. In connection with the conduct alleged in this Complaint, Defendants, directly and 

indirectly, singly or in concert with others, made use of the means or instrumentalities of interstate 

commerce, the means or instruments of transportation or communication in interstate commerce, 

or the mails. 

IV. DEFENDANTS’ ACTS IN VIOLATION OF THE SECURITIES LAWS 
 
A. Defendants’ Unregistered Securities Offering and Investment Adviser 

Services  

14. From approximately May 2020 to January 2024, Varga and Pannon engaged in the 

offer and sale of unregistered securities in the form of investment contracts for investments in the 

Pannon Fund for which they served as investment advisers.  Defendants represented to prospective 

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and actual investors that their funds would be pooled to buy and sell covered options contracts on 

stocks using a protective net-credit collar strategy.  Defendants primarily solicited unsophisticated 

investors of Serbian origin residing in South Florida, with others located in Serbia, New York, 

Luxembourg, and the Czech Republic. 

15. Varga and Pannon solicited investors in several ways.  Defendants offered Pannon 

Fund investments through telephone, text messages, WhatsApp messages, emails, in-person 

meetings, and Zoom meetings. Defendants also engaged in general solicitation via a Pannon 

referral program under which they paid referral fees to existing investors for referring new 

investors with whom Varga and Pannon had no preexisting relationships.  Defendants did not take 

reasonable steps to verify whether the Pannon Fund’s prospective or actual investors were 

accredited, and many were, in fact, unaccredited, including first-time investors.   

16. Defendants provided investors with written documents, including investment 

agreements and account statements, documenting investments in the Pannon Fund. Varga, on 

behalf of Pannon, signed and issued the investment agreements.  

17. Early versions of the investment agreement included the phrase “Stock Broker 

Agreement” in the title of the agreement.  As the fraud progressed, Defendants subsequently sent 

new investors agreements they titled as the “Pannon Risk-Managed Income Fund Investment 

Agreement.”  Defendants represented to investors verbally and in writing, and investors 

understood, that signing an investment agreement would allow them to participate in the Pannon 

Fund.   

18. At least as early as February 2023, Defendants included a provision in some 

investment agreements to the effect that investors’ original deposited funds would be matched in 

an escrow account. 

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6 
 

19. Defendants emailed investors in the Pannon Fund quarterly and annual “Investor 

Balance Detail” account statements through at least the first quarter of 2023.  These account 

statements purported to show individual investors “all [of their] investor deposits from the initial 

investment into the fund,” their “current total investor fund participation balance,” and dividend 

payments through the date of the statements. 

20. Defendants also sent several investors additional documents describing the Pannon 

Fund and its trading strategy, including quarterly factsheets and a “white paper.”  

21. The factsheets outlined the Pannon Fund’s four-step “Investment strategy 

overview” under which the fund purportedly would:  (i) purchase all underlying stocks in the 

Nasdaq-100 Index; (ii) deploy a rule-based options collar strategy; (iii) distribute monthly income 

from options premiums; and (iv) on the investors’ request, use their monthly income to reinvest in 

the fund.  The factsheets marketed the Pannon Fund as “[a]n income solution that targets high 

current income with less risk.”   

22. In these materials, Defendants promoted the Pannon Fund’s use of a “constant, fully 

financed market hedge that seeks to reduce downside risk” and Defendants’ “rules-based options 

trading strategy that seeks to produce high income using the Nasdaq-100 Index equities.”   

23. In their so-called “white paper,” Defendants further described the Pannon Fund’s 

investing methodology as a protective net-credit collar strategy.  The Defendants also reiterated 

the Pannon Fund’s four-step investment overview as follows:  

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7 
 

 

24. Through the factsheets and “white paper,” Defendants held themselves out as 

providing and, in fact, did provide, securities investment advice to the Pannon Fund.  Defendants 

advised and made investment decisions for the Pannon Fund by trading securities in the form of 

stocks and stock options for the Pannon Fund and received compensation through misappropriated 

funds.  As the sole owner, principal, and manager of Pannon, an unregistered investment adviser, 

Varga controlled Pannon and its advice to the Pannon Fund concerning its investments in stocks 

and stock options.  By advising the Pannon Fund as to the value and advisability of investing in, 

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8 
 

purchasing, and selling stocks and stock options for compensation, Defendants acted as investment 

advisers within the meaning of the Advisers Act to the Pannon Fund. 

25. Defendants failed to provide investors with sufficient financial information about 

the Pannon Fund.  The factsheets, for example, contained only basic financial information about 

the Pannon Fund such as the fund’s quarterly balance and purported profits.  None of the materials 

Defendants sent to investors contained financial statements for the Pannon Fund.   

26. Investors completely depended on Defendants to make successful investments to 

generate investment returns, to pay the specified interest, and to return the investors’ principal.  

Defendants exercised exclusive control over investors’ funds, including making all investment 

decisions purportedly generating investor returns.  The investors understood they were making a 

passive investment in the Pannon Fund and that profits were going to be generated by the 

Defendants’ efforts.  

27. The investment agreements for interests in the Pannon Fund sold by Varga and 

Pannon are securities within the meaning of the Securities Act, the Exchange Act, and the Advisers 

Act because they are investment contracts.  The investment agreements are investment contracts 

because: (i) they were sold to investors for money; (ii) investors were dependent upon the expertise 

or efforts of the Defendants; (iii) investors expected to profit from the investment agreements; and 

(iv) all investor profits were to be generated by Defendants’ efforts.   

28. No registration statement was filed with the Commission pursuant to the Securities 

Act relating to the investments contracts Defendants offered and sold, and no exemption from 

registration existed with respect to the Pannon Fund offering.   

  

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9 
 

B. Defendants’ Materially False and Misleading Omissions and Misstatements 
 
29. Defendants knowingly made, both orally and in writing, materially false and 

misleading statements and omissions to investors and the Pannon Fund about, among other things: 

(i) the use of investor funds; (ii) the profitability and safety of investing in the Pannon Fund; and 

(iii) Varga’s purported background as a registered representative of a broker-dealer.   

(1) Materially False and Misleading Statements Regarding Use of Funds 
 

30. Defendants misrepresented to investors and their client, the Pannon Fund, in written 

factsheets and a “white paper” that their funds would be pooled in the Pannon Fund to buy and sell 

covered options contracts on stocks using a protective net-credit collar strategy.  Investors 

understood from Defendants’ representations that this trading strategy was employed to maximize 

profitability and minimize risk. These representations concerning the use of investor and client 

funds were materially false and misleading because, among other things, Defendants commingled 

investor and client funds, and used those funds to: (i) pay Varga’s personal expenses; (ii) make 

Ponzi-like payments to other investors; and (iii) employ riskier options trades than were disclosed 

to investors.  

31. Although Defendants pooled investor funds to make some trades of stocks and 

stock options for the purported Pannon Fund, funds were pooled and commingled in Varga’s 

personal brokerage account, as well as a brokerage account Varga eventually opened in the name 

of Pannon in September 2021, to make those trades.  Varga also commingled investor funds with 

his own funds in his personal bank accounts.   

32. Next, in or about September 2021, Defendants linked a debit card to Pannon’s 

brokerage account and began using that card to pay for Varga’s personal expenses.  Varga, who 

signed the debit card application in his capacity as Pannon’s agent, used the card to pay for personal 

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10 
 

expenses.  Varga also paid for personal expenses with investor funds by making ACH electronic 

transfers and Bill Pay payments from the Pannon brokerage account. 

33. Defendants used investor funds to pay at least: $64,200 in credit card bills, $40,000 

for auto related expenses, $24,300 for personal and luxury goods, $15,400 in tuition expenses for 

private school, $4,600 for tennis lessons, and $2,900 to nail and wax salons.  Of the approximately 

$1.6 million raised by Defendants, Defendants misappropriated at least $260,300 of investor funds 

for Varga’s personal use. 

34.   Defendants also used at least $53,000 to make Ponzi-like payments to other 

investors.  For example, on August 1, 2022, an investor deposited $25,000 into Pannon’s bank 

account.  Within a little over a week of receiving the funds, Defendants used approximately 

$12,000 of those funds to pay 8 other investors. 

35. Finally, Defendants did not use the trading strategy promised and disclosed to 

investors.  As disclosed to investors, Defendants should have utilized a protective net-credit collar 

strategy by consistently buying the underlying equity securities of their options trades.  The actual 

trading of the Pannon Fund rarely employed this strategy.  Instead, Defendants mostly traded in 

vertical option spreads for the Pannon Fund, which are considerably riskier than the protective 

collar strategy that was disclosed to investors.  In fact, the vast majority of the Pannon Fund’s 

positions involved trading options without owning the underlying asset. The Defendants never 

disclosed the riskier trading strategy they actually used for the Pannon Fund.  

36. Varga and Pannon knew, or were reckless in not knowing, each of these 

misstatements and omissions were false and misleading because Varga, through his exclusive 

control of Pannon, was solely responsible for the management of the Pannon Fund, including the 

selection and disposition of options contract investments, and he controlled all the bank and 

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11 
 

brokerage accounts from which the Pannon Fund’s assets were deposited, commingled and 

misappropriated or used to pay several investors through Ponzi-like payments.   

(2) Profitability and Safety of the Investment  

37. Defendants also attracted investors to invest in the Pannon Fund using several false 

promises of profitability and safety, each of which they knew, or were reckless in not knowing, 

were materially false and misleading. 

38. First, Defendants represented that their net-credit collar trading strategy would 

generate profits sufficient to support high monthly returns to investors while minimizing potential 

losses.  Defendants promised most of their investors fixed monthly dividends of 3% to 4% a month, 

even though the risky trading strategies they employed led to trading losses of over $200,000.   

39. Defendants knew, or were reckless in not knowing, they could not sustain the fixed 

returns of 3% to 4% they promised investors in light of their exclusive control of the Pannon Fund 

and history of unprofitable trading.  Specifically, from December 2019 through May 2020, Varga 

traded in his personal account using the same vertical options trading strategy that he employed 

when trading on behalf of the Pannon Fund.  For most of that period, Varga traded on his own 

behalf and began trading with investor funds in May 2020.  Varga’s trading in that account led to 

cumulative losses starting in December 2019 through May 2020.   

40. Accordingly, as early as December 2019, Varga knew, or was reckless in not 

knowing, the trading strategy he ultimately used for the Pannon Fund would not generate 

consistent monthly profits sufficient to satisfy the monthly dividends he promised.  Varga’s 

knowledge that the promised, fixed dividends were unsustainable is imputed to Pannon because 

Varga was at all relevant times Pannon’s control person and Chief Executive Officer. 

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41. Despite this knowledge, Varga and Pannon continued to solicit investments in the 

Pannon Fund by promising unsustainable, fixed monthly dividends to investors, even after 

experiencing continued losses.  From July 2021 through December 2021, the Pannon Fund 

experienced a sequence of six months of trading losses, followed by further losses in the first 

quarter of 2022.  Given the losses and previously paid dividends to investors, the Pannon Fund 

could not sustain the promised monthly dividend payments to investors starting approximately as 

early as November 2021. 

42. Defendants also made several misrepresentations concerning the safety of investing 

in the Pannon Fund.  Verbally and in writing in the investment agreements, Defendants told 

investors that they could demand a full or partial withdrawal of their funds at any time and receive 

their funds within a few business days, typically 3 to 15 days.  Despite redemption requests from 

several investors, Defendants have failed to return their principal funds months after they 

submitted their requests. 

43. Defendants further represented to several investors verbally and in several versions 

of the investment agreements that Pannon was ensuring the liquidity of their investment by 

matching the investors’ deposited funds in a separate escrow account.  Multiple investors signed 

investment agreements providing that Pannon would put funds matching the investors’ deposited 

funds in an escrow account.  The promised escrow account did not exist.  

44.   Defendants stopped paying dividends to several investors starting in the last 

quarter of 2023, initially blaming the delay in payment on processing issues with online bill pay 

services and banks.  Unable to meet their obligations to investors, Defendants eventually stopped 

returning investor calls, messages, and emails. 

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13 
 

45. Defendants knew, or were reckless in not knowing, that each of the representations 

detailed above were false and misleading in light of their exclusive control over the disbursement 

of investor dividends and control over the accounts in which investor and client funds associated 

with the Pannon Fund were held.  Defendants further knew, or were reckless in not knowing, that 

each of the representations discussed above was false because Defendants had exclusive control 

over the brokerage accounts used to trade on behalf of the Pannon Fund, and Defendants were 

aware of their misuse and misappropriation of the investor and client funds. 

(3) Varga’s Lies About His Background 

46. In soliciting investments, Varga told investors that he was a registered 

representative of a broker-dealer.  This statement was false, as Varga has never been registered or 

associated with a registered broker-dealer.  

47. Varga’s false statements to investors about his registration status was important, 

especially to investors who had little investment experience and who relied on Varga’s purported 

experience as a licensed broker.  Varga’s misrepresentation that he was a registered representative 

lulled inexperienced investors into trusting Varga and Pannon with their hard-earned money, 

including funds earmarked for retirement, to purchase a home, or pay college tuition for their 

children.  

48. All of the misrepresentations set forth herein, individually and in the aggregate, are 

material.  A reasonable investor would consider material the misrepresented and omitted facts 

regarding how their money would be invested, the profitability and safety of those investments, 

the misuse and misappropriation of investor funds, and misrepresentation that Varga was a 

registered representative of a broker-dealer. 

  

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V. CLAIMS FOR RELIEF 

COUNT I 

Violations of Sections 5(a) and 5(c) of the Securities Act 

49. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

50. No registration statement was filed or in effect with the Commission pursuant to 

the Securities Act with respect to the securities issued by Varga and Pannon as described in this 

Complaint, and no exemption from registration existed with respect to these securities. 

51. From approximately May 2020 until at least January 2024, Varga and Pannon, 

directly and indirectly: 

a. made use of any means or instruments of transportation or 
communication in interstate commerce or of the mails to sell 
securities, through the use or medium of a prospectus or otherwise; 
 

b. carried or caused to be carried securities through the mails or in 
interstate commerce, by any means or instruments of transportation, 
for the purpose of sale or delivery after sale; or 
 

c. made use of any means or instruments of transportation or 
communication in interstate commerce or of the mails to offer to sell 
or offer to buy through the use or medium of any prospectus or 
otherwise any security,  

 
without a registration statement having been filed or being in effect with the Commission as to 

such securities. 

52. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and, 

unless enjoined, are reasonably likely to continue to violate Sections 5(a) and 5(c) of the Securities 

Act [15 U.S.C. §§ 77e(a) and 77e(c)]. 

  

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COUNT II 

Violations of Section 17(a)(1) of the Securities Act  

53. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

54. From approximately May 2020 until at least January 2024, Varga and Pannon, in 

the offer or sale of securities by use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, knowingly or 

recklessly employed devices, schemes or artifices to defraud. 

55. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and 

unless enjoined, are reasonably likely to continue to violate, Section 17(a)(1) of the Securities Act 

[15 U.S.C. § 77q(a)(1)]. 

COUNT III 

Violations of Section 17(a)(2) of the Securities Act 

56. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

57. From approximately May 2020 until at least January 2024, Varga and Pannon, in 

the offer or sale of securities by use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, negligently 

obtained money or property by means of untrue statements of material facts or omissions to state 

material facts necessary to make the statements made, in light of the circumstances under which 

they were made, not misleading. 

58. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and 

unless enjoined, are reasonably likely to continue to violate, Section 17(a)(2) of the Securities Act 

[15 U.S.C. § 77q(a)(2)]. 

  

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COUNT IV 

Violations of Section 17(a)(3) of the Securities Act 

59. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

60. From approximately May 2020 until at least January 2024, Varga and Pannon, in 

the offer or sale of securities by use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly, negligently 

engaged in transactions, practices, and courses of business which have operated as a fraud or deceit 

upon the purchasers. 

61. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and 

unless enjoined, are reasonably likely to continue to violate, Section 17(a)(3) of the Securities Act 

[15 U.S.C. § 77q(a)(3)]. 

COUNT V 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) 

62. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

63. From approximately May 2020 until at least January 2024, Varga and Pannon, 

directly or indirectly, by use of the means and instrumentalities of interstate commerce, or of the 

mails, knowingly or recklessly employed devices, schemes or artifices to defraud in connection 

with the purchase or sale of securities. 

64. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and 

unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5(a) [17 C.F.R. § 240.10b-5(a)] thereunder. 

  

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COUNT VI 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) 

65. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

66. From approximately May 2020 until at least January 2024, Varga and Pannon, 

directly or indirectly, by use of the means and instrumentalities of interstate commerce, or of the 

mails, in connection with the purchase or sale of securities, knowingly or recklessly made untrue 

statements of material facts or omitted to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they were made, not misleading. 

67. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and 

unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5(b) [17 C.F.R. § 240.10b-5(b)] thereunder. 

COUNT VII 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5(c) 

68. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

69. From May 2020 until at least January 2024, Varga and Pannon, directly or 

indirectly, by use of the means and instrumentalities of interstate commerce, or of the mails, in 

connection with the purchase or sale of securities, knowingly or recklessly engaged in acts, 

practices, and courses of business which have operated as a fraud upon the purchasers of such 

securities. 

70. By reason of the foregoing, Varga and Pannon, directly or indirectly, violated and, 

unless enjoined, are reasonably likely to continue to violate, Section 10(b) of the Exchange Act 

[15 U.S.C. § 78j(b)] and Rule 10b-5(c) [17 C.F.R. § 240.10b-5(c)] thereunder. 

  

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COUNT VIII 

Violations of Section 206(1) of the Advisers Act 

71. The Commission repeats and realleges Paragraphs 1 through 48 of this Complaint. 

72. From approximately May 2020 until at least January 2024, Varga and Pannon, for 

compensation, engaged in the business of directly advising others as to the value of securities or 

as to the advisability of investing in, purchasing, or selling securities.  Varga and Pannon were 

therefore “investment advisers” within the meaning of Section 202(a)(11) of the Advisers Act [15 

U.S.C. § 80b-2(a)(11)]. 

73. Varga and Pannon, by the use of the mails or any means or instrumentality of 

interstate commerce, directly or indirectly, knowingly or recklessly employed a device, scheme, 

or artifice to defraud one or more clients or prospective clients. 

74. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are 

reasonably likely to continue to violate Section 206(1) of the Advisers Act [15 U.S.C. § 80b-6(1)]. 

COUNT IX 

Violations of Section 206(2) of the Advisers Act 

75. The Commission repeats and realleges Paragraphs 1 through 48, and Paragraphs 

71-72 of this Complaint. 

76. From approximately May 2020 until at least January 2024, Varga and Pannon, by 

the use of the mails or any means or instrumentality of interstate commerce, directly or indirectly, 

negligently engaged in transactions, practices, or courses of business which operated as a fraud or 

deceit upon one or more clients or prospective clients. 

77. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are 

reasonably likely to continue to violate Section 206(2) of the Advisers Act [15 U.S.C. § 80b-6(2)]. 

  

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COUNT X 

Violations of Section 206(4) and Rule 206(4)-8(a)(1) of the Advisers Act  

78. The Commission repeats and realleges Paragraphs 1 through 48, and Paragraphs 

71-72 of this Complaint. 

79. Pannon Fund was a “pooled investment vehicle[]” within the meaning of Rule 

206(4)-8(b) of the Advisers Act. 

80. From approximately May 2020 until at least January 2024, Varga and Pannon, 

directly or indirectly, negligently made untrue statements of material facts and omitted to state 

material facts necessary in order to make the statements made, in the light of the circumstances 

under which they were made, not misleading, to investors or prospective investors in Pannon Fund. 

81. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are 

reasonably likely to continue to violate Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)], 

and Advisers Act Rule 206(4)-8(a)(1) [17 C.F.R. 275.206(4)-8(a)(1)]. 

COUNT XI 

Violations of Section 206(4) and Rule 206(4)-8(a)(2) of the Advisers Act  

82. The Commission repeats and realleges Paragraphs 1 through 48 and Paragraphs 72 

and 79 of this Complaint. 

83. From approximately May 2020 until at least January 2024, Varga and Pannon, 

directly or indirectly, negligently engaged in acts, practices, or course of business that were 

fraudulent, deceptive, or manipulative with respect to investors and/or prospective investors in 

Pannon Fund. 

84. By reason of the foregoing, Varga and Pannon violated and, unless enjoined, are 

reasonably likely to continue to violate Section 206(4) of the Advisers Act [15 U.S.C. § 80b-6(4)], 

and Advisers Act Rule 206(4)-8(a)(2) [17 C.F.R. § 275.206(4)-8(a)(2)]. 

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VI. RELIEF REQUESTED 

The Commission respectfully requests the Court find that the Defendants committed the 

foregoing violations, and: 

A. Permanent Injunction 

Issue a permanent injunction enjoining Varga and Pannon and its officers, agents, servants, 

employees, attorneys, and all persons in active concert or participation with them and each of them, 

from violating Sections 5(a), 5(c), and 17(a) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c), 

and 77q(a)], Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 [17 C.F.R. 

§ 240.10b-5] thereunder; and further enjoining Varga and Pannon from violating Sections 206(1), 

206(2), and 206(4) and Rule 206(4)-8(a) thereunder of the Advisers Act [15 U.S.C. §§ 80b-6(1), 

80b-6(2), and 80b-6(4), and 17 C.F.R. § 275.206(4)-8(a)]. 

B. Disgorgement and Prejudgment Interest 

Issue an order directing Varga and Pannon to disgorge all ill-gotten gains or proceeds 

received, with prejudgment interest thereon, resulting from the acts and/or courses of conduct 

complained in this Complaint. 

C. Civil Monetary Penalties 

Issue an order directing Varga and Pannon to pay civil money penalties pursuant to Section 

20(d) of the Securities Act [15 U.S.C. § 77t(d)], Section 21(d) of the Exchange Act [15 U.S.C. 

§ 78u(d)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 

D. Officer and Director Bar Against Varga 

Issue an order pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and 

Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], permanently prohibiting Varga 

from acting as an officer or director of any issuer whose securities are registered with the 

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Commission pursuant to Section 12 of the Exchange Act or which is required to file reports with 

the Commission pursuant to Section 15(d) of the Exchange Act.  

E. Further Relief 

Grant such other and further relief as may be necessary and appropriate. 

F. Retention of Jurisdiction 

Further, the Commission requests the Court retain jurisdiction over this action and over 

Defendants in order to implement and carry out the terms of all orders that may hereby be entered, 

or to entertain any suitable application or motion by the Commission for additional relief within 

the jurisdiction of this Court. 

 

Dated: October 30, 2024          Respectfully submitted, 

             s/ Christine Nestor  
      Christine Nestor, Esq. 

Senior Trial Counsel 
Florida Bar No. 597211 
Direct Dial: (305) 982-6367 
Email: [email protected] 

           
      ATTORNEY FOR PLAINTIFF 

SECURITIES AND EXCHANGE 
COMMISSION 

      801 Brickell Avenue, Suite 1950 
      Miami, FL 33131 
      Telephone: (305) 982-6300 
      Facsimile: (305) 536-4154 
 
Of counsel: 
 
Melika Hadziomerovic, Esq. 
Counsel 
Securities and Exchange Commission 
801 Brickell Avenue, Suite 1950 
Miami, Florida 33131 
Telephone: (305) 416-6277 

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