SEC Alleges India-Based Operators of High-Yield Investment Scheme Used Social Media to Perpetuate Fraud

By Patricia Uceda, Fall 2014 Graduate Research Assistant

tajThe SEC recently announced charges against two India-based operators of a high-yield investment scheme that allegedly solicited investors through aggressive and pervasive pitches on social media networks such as Facebook, YouTube, and Twitter.  The purported investment management company was called “Profits Paradise” and was allegedly run by Pankaj Srivastava and Nataraj Kavuri.

The SEC alleges that Srivastava and Kavuri anonymously solicited investors for their company on social media by offering “guaranteed” daily profits. They allegedly claimed that the invested funds would be traded on foreign exchanges as well as in stocks and commodities, and that it was highly lucrative. In order to perpetuate this alleged fraud, they allegedly created a legitimate-looking “Profits Paradise” website, as well as accounts on various social media networks, to portray the profits as huge and the risk as minimal. The SEC alleges that their website alone attracted as many as 4,000 visitors a day as investors were lured in by the alleged misleading claims. Continue reading

Updated Investor Alert: Tips To Avoid Fraud Online

By Patricia Uceda, Fall 2014 Graduate Research Assistant

online theftThe SEC has provided several tips that investors can follow to avoid becoming a victim of online fraud. The key tip they emphasis is to be an educated investor, which can largely be accomplished by following these tips: Continue reading

Updated Investor Alert: Social Media and Investing

By Patricia Uceda, Fall 2014 Graduate Research Assistant

internetThe SEC’s Office of Investor Education and Advocacy issued an updated Investor Alert to further educate investors of fraudulent investment schemes involving social media.  We’ve discussed the dangers of social media and investing before, and the SEC’s update provides additional important information.  Due to the prevalent nature of the Internet in our society, U.S. investors are increasingly turning to social media for information about investing. This includes online networks such as Facebook, YouTube, Twitter, and LinkedIn, to name a few.

While social media can be useful for investors to read news, conduct research on stocks, and find background information on a broker-dealer or investment adviser, it also presents opportunities for fraudsters to implement deceptive investment schemes. Online they are able to contact a wide range of people at a relatively low cost. It is also surprisingly easy to create a website, account, or email that looks genuine and authentic, which can lure investors into a false sense of security. In addition, it is difficult to track down fraudsters who use social media because of the anonymous nature of the Internet. Therefore, it is harder to hold these fraudsters accountable.  Be sure to check back tomorrow when we’ll discuss tips for preventing online investment fraud.

SEC Seeks to Stop International Penny Stock Fraud Involving Tennessee Coal Mining Company

By Patricia Uceda, Fall 2014 Graduate Research Assistant

miningThe SEC recently uncovered an alleged international penny stock fraud scheme being conducted by two Canadians through the use of a coal mining company located in Tennessee. The alleged scheme was a classic pump-and-dump scam that involved hyping up the stock price of a company and then cashing out. Continue reading

Key Findings from NASAA’s Enforcement Report: Senior Investors at Risk

By Patricia Uceda, Fall 2014 Graduate Research Assistant

seniorIn its 2014 report of its survey of 2013 nationwide enforcement data, NASAA found senior investors are more susceptible to investment fraud than younger investors, reinforcing their and the SEC’s earlier announcement of the need for new initiatives focusing on senior investor issues.

Specifically, the survey showed that in 2013 there were 1,463 state enforcement actions which tracked the victims by age, and of those 1,463 actions, 311 involved abuse of senior citizens. NASAA believes that this figure was conservative and that the actual number of cases involving senior abuse was undoubtedly greater. Continue reading

Operator of Bitcoin Stock Exchange Sanctioned by SEC

By Patricia Uceda, Fall 2014 Graduate Research Assistant

The SEC has sanctioned a computer programmer that was allegedly illegally operating online trading exchanges for securities based on virtual currencies such as Bitcoin without registering the venues. The programmer was also sanctioned for conducting unregistered offerings.  Continue reading