On Dec. 23, the U.S. Securities and Exchange Commission charged a stock promoter based in Santa Barbara with fraudulently raising nearly $3.5 million from investors purportedly to purchase Facebook and Twitter shares prior to their initial public offerings.

The SEC alleges that instead of purchasing the shares in the secondary market as promised, Efstratios “Elias” Argyropoulos and his firm Prima Capital Group misappropriated investor funds. They used the money primarily for day trading of stocks and options as well as to pay off certain investors who complained when they didn’t receive the promised Facebook or Twitter shares.

Argyropoulos agreed to settle the SEC’s charges and be barred from working for an investment adviser or broker-dealer. Financial penalties will be determined at a later date, according to a release from the SEC.

“Argyropoulos capitalized on the high demand for pre-IPO Facebook and Twitter shares to steal investor money and secretly fund his own day trading,” Michele Layne, director of the SEC’s Los Angeles regional office said in a release.

The SEC’s complaint charges Argyropoulos and Prima Capital with violating the antifraud provisions and broker-dealer registration provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Argyropoulos and Prima Capital agreed to settle the charges without admitting or denying the allegations, and the settlement is subject to court approval.

The SEC separately announced an administrative proceeding against Khaled Eldaher, a registered representative living in Austin, Texas. According to the release, the SEC Enforcement Division alleges that while working for a registered broker-dealer, Eldaher reached a side agreement with Argyropoulos to solicit investors and receive 50 percent of the mark-up on Facebook shares he sold. Eldaher sold more than $362,000 worth of Facebook shares and was paid $15,478 by Prima Capital. He was later terminated by the broker-dealer for selling securities other than through the firm. The Enforcement Division alleges that Eldaher’s sales of unregistered securities violated certain sections of the Exchange Act. The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate, the release states.

The SEC’s investigation was conducted by Tony Regenstreif and supervised by Victoria Levin of the Los Angeles regional office. The Enforcement Division’s litigation against Eldaher will be led by Karen Matteson.