SEC enforcement | Online trading
Customers Deposited About $35 Million Through Prosperity, an Unregistered Broker, SEC Finds
Jordan Morgan and his partners used social media, paid affiliates and turnkey brokerage infrastructure to offer leveraged contracts tied to individual stocks. The SEC found Morgan performed broker activity without registration.
What the SEC order says
- Customers deposited approximately $35 million into Prosperity trading accounts from 2020 through 2023.
- Prosperity offered contracts for differences, including leveraged contracts tied to 37 stocks listed in the United States and Europe.
- The SEC found Jordan Morgan helped operate the business and induced or attempted to induce security-based swap transactions without broker registration.
- Prosperity used third-party white-label providers for its trading technology, pricing, liquidity, customer verification and custody infrastructure.
- Morgan agreed to a $65,000 civil penalty, a cease-and-desist order and an industry bar with a right to apply for reentry after two years.
- The order does not quantify customer trading losses, identify customer complaints or impose customer restitution.
The platform customers experienced as Prosperity was assembled largely from outside infrastructure, but its brand, promotion and customer relationships remained central to the SEC’s case.
A branded brokerage with no SEC registration
From 2020 through 2023, customers registered through Prosperity’s website, funded trading accounts with Bitcoin or other crypto assets and viewed their balances and trading histories under the Prosperity brand. They understood Prosperity to be their broker. Neither Prosperity nor co-owner Jordan Morgan had ever registered with the SEC.
The SEC said Morgan, an online trader, launched Prosperity with two partners in 2020. The privately owned entity was incorporated in St. Vincent and the Grenadines and operated in the United States through a branded website. Its owners promoted the platform to an audience that included U.S. residents.
The marketing operation stretched across YouTube, Telegram, Instagram and Prosperity’s own website. The owners also recruited affiliates who promoted the platform to their networks and received compensation based on transactions. U.S. residents were permitted to register and trade stock-based contracts through the platform.
How a turnkey brokerage became Prosperity
Prosperity did not build the full trading operation itself. According to the order, it contracted with white-label service providers that supplied ready-to-operate brokerage infrastructure under Prosperity’s name.
Those providers designed the website, issued the CFDs, supplied back-office systems and sublicensed a third-party trading application. They also provided pricing, liquidity, trading support, customer identity verification and custody services for customer funds.
The operating model
Prosperity’s role was not limited to placing its name on a website. Morgan interacted with customers, raised customer questions with the providers, sought information about trades, processed certain withdrawals and monitored the business with the providers. Prosperity also agreed to replenish a margin account when its balance fell below a prescribed threshold.
Customers traded price movements, not the stocks
A contract for difference, or CFD, pays according to the change in an underlying asset’s value between the opening and closing of a position. The customer does not own the underlying asset. No corresponding stock, currency or commodity needs to be purchased or held for that customer.
Prosperity offered CFDs tied to foreign exchange, crypto assets, commodities, broad market indices and individual stocks. Customers could take a long position, which gained when the referenced price rose, or a short position, which gained when the price fell. The order says customers received significant leverage, creating the possibility of large gains and significant downside.
The legal distinction mattered. The SEC did not treat every product mentioned in the order as the basis for the broker-registration violation. It found that CFDs tied to individual stocks were security-based swaps because their value was based on a single security. Customers regularly traded those stock-based contracts.
The customer stakes the record supports
- Customers dealt with a platform they understood to be their broker, even though Prosperity had never registered with the SEC.
- Customers funded accounts using crypto assets that the white-label providers held in a margin account.
- Leverage increased both potential upside and potential downside.
- The order does not state how much customers gained or lost, whether withdrawals were generally completed, or whether any customer funds were misappropriated.
Revenue followed trading activity
Prosperity charged a commission on each trade and shared part of it with the white-label providers. It also received a portion of overnight swap fees and spreads, the difference between buying and selling prices. Morgan received part of the commissions and spreads as compensation.
Morgan and his partners also referred other people to the same providers to launch additional brokers. Their compensation from those referrals was based on completed trades, including stock-based CFD trades.
This structure linked compensation to transaction volume. The SEC order documents that connection, but it does not find that the revenue model caused a specific customer to trade excessively or suffer a particular loss.
From launch to shutdown and sanctions
Morgan and two partners launched Prosperity using third-party white-label brokerage services.
Prosperity solicited customers, including U.S. residents, and offered stock-based CFDs while remaining unregistered.
Prosperity ended its relationship with the white-label providers and subsequently wound down.
The SEC entered its settled order against Morgan, including a cease-and-desist directive, an industry bar and a civil penalty.
What the SEC found, and what the settlement does not prove
The SEC found that Morgan willfully violated Section 15(a)(1) of the Securities Exchange Act. That provision bars a person from effecting securities transactions, or inducing or attempting to induce them for others, unless the broker or dealer is registered or the person is associated with a registered firm.
In this context, the order explains that “willfully” means Morgan knew what he was doing. It does not require proof that he knew his conduct violated the securities laws.
Unregistered broker activity
The SEC found Morgan effected transactions in, and induced or attempted to induce, stock-based security swap trades without registration.
No general admission
Morgan consented without admitting the findings, except for the SEC’s jurisdiction and the limited bankruptcy provision in the order.
No quantified customer loss
The order reports deposits and trading practices, but it does not calculate customer losses or make a fraud finding.
For the limited purpose of determining whether debts connected to the proceeding may be discharged in bankruptcy, Morgan admitted that the order’s findings are true. The SEC also specified that its findings are not binding on any other person or entity.
The penalty goes to the Treasury, not customers
The order requires Morgan to cease and desist from current or future violations of the broker-registration provision. It also bars him from association with brokers, dealers, investment advisers and several other regulated securities entities, with a right to apply for reentry after two years.
Reentry is not automatic. An application may be evaluated based on compliance with the order and payment of relevant penalties, awards or restitution obligations.
- The total civil money penalty is $65,000.
- The money is designated for transfer to the U.S. Treasury’s general fund.
- The order does not impose disgorgement or direct restitution to Prosperity customers.
- Missing an installment can make the outstanding amount immediately due at the SEC staff’s discretion.
Prosperity shows how a brokerage-facing brand could be assembled from rented technology, outsourced custody, outside pricing and a third-party trading application. The SEC’s order establishes Morgan’s registration violation and the scale of deposits flowing through the platform. It does not answer how those customers ultimately fared. That unresolved gap separates the regulatory case the SEC brought from the fuller accounting customers would need.
Explore by category
Antitrust
Monopolies and anti-competition tactics used to crush rivals.
View Cases →Product Safety Violations
When companies sell dangerous goods, consumers pay the price.
View Cases →Environmental Violations
Pollution, ecological collapse, and unchecked greed.
View Cases →Labor Exploitation
Wage theft, worker abuse, and unsafe conditions.
View Cases →Data Breaches & Privacy
Misuse and mishandling of personal information.
View Cases →Financial Fraud & Corruption
Lies, scams, and executive impunity that distort markets.
View Cases →Intellectual Property
IP theft that punishes originality and rewards copying.
View Cases →Misleading Marketing
False claims that waste money and bury critical safety info.
View Cases →
