Referencing to a Regulator in Marketing Material

Entities that operate in the financial services and credit industries will often reference the Regulator or use the Regulator’s logo in marketing material in an attempt to legitimize their business. However, use of the Regulator’s logo is not permitted and references to a Regulator can often overstate Regulator’s extent of oversight.

References to a Regulator and the use of the Regulator’s logo in marketing material is especially popular when targeting overseas clients. As a result, entities seek to promote themselves as regulated. When referencing a Regulator in marketing material, entities should ensure they do not promote themselves as being supervised or approved by a Regulator, or stating that the Regulator has oversight of the entity.

If an entity promotes itself as being supervised or approved by a Regulator, or stating that the Regulator has oversight of the entity, you should not do business with such entity.

Snack Company Investment Scam

The Securities and Exchange Commission charged three individuals who defrauded investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co.

The defendants falsely promised investors that after being acquired, Starship Snack Corp. investors would get a one-to-one exchange of Starship shares for Monster or Coca-Cola shares. Moreover, the defendants falsely claimed that investors had “no down-side risk” and that investors could get their investment back with 5 percent interest if the shares failed to appreciate over a year.

According to the SEC’s complaint, Starship had no agreement with Monster Energy or Coca-Cola , and the defendants used investor funds as their own personal piggy bank, spending them to rent and decorate a New York City apartment, and on travel, meals, and other personal expenses.

Please find attached a link for the full story Snack Company Investment Scam

The Most Frequent Advertising Rule Compliance Issues Identified

Below are the most frequent deficiencies that OCIE staff has identified in connection with failure to comply with the Advertising Rule:

  • Misleading Performance Results
  • Misleading One-on-One Presentations (did not disclose that the advertised performance results, did not reflect the deduction of advisory fees, and that client returns would be reduced by such fees and other expenses)
  • Misleading Claim of Compliance with Voluntary Performance Standards
  • Cherry-Picked Profitable Stock Selections
  • Misleading Selection of Recommendations

Please find attached a link for the full report Misleading Advertisements

Please be aware, and be skeptical about marketing materials.


NFA orders Chicago, Ill., introducing broker Kingsview Futures LLC to pay a $50,000 fine

You are invited to read the complete text of the Complaint, it may assist you. Here is a brief:

  • Kingsview Futures obtained virtually all of the self-directed accounts from customer leads generated by Trading Advantage LLC (Trading Advantage).
  • Trading Advantage is a non-NFA Member trading education firm. The firm provides clients with live online courses and in-person seminars. In Trading Advantage’s courses, individuals act as “mentors” and “coaches” and instruct student attendees on how to understand charts and market information, develop trading strategies, and identify/manage trading signals. Trading Advantage has situated its investment school” in offices directly across the hall from Kingsview Futures’ Chicago office.
  • Trading Advantage promotional materials tout the “secrets of trading” and “successful methods” which Trading Advantage claims are needed to “make a fortune” in the markets.
  • Most of the customers who opened self-directed accounts with Kingsview Futures were current or prior Trading Advantage students who Trading Advantage referred to Kingsview Futures.
  • Kingsview Futures was fully aware that the customers who were referred to it by Trading Advantage had been exposed to deceptive and misleading promotional material touting Trading Advantage’s classes and seminars and the dramatic profit potential of trading futures.
  • Kingsview Futures charged minimal commissions (e.g., $1 to $2 per round-turn) to customers with self-directed accounts. However, these customers – while students of Trading Advantage – paid thousands of dollars to Trading Advantage to learn the supposed “secrets of a successful trader.”
  • For example, Customer A was as a self-employed handy man with annual income ranging from $25,000 to $50,000 and a liquid net worth of $50,000. Customer A was a Trading Advantage student for about one year and paid approximately $65,000 for classes and in-person seminars. Yet, Customer A found actual trading to be more difficult than he had expected and he was unsure if he was fit to trade on his own. Customer A lost $18,000 through his trading account at Kingsview Futures and paid commission charges of almost $1,600.
  • Another customer, Customer B, purchased a three-month Trading Advantage membership for $3,000 and later bought a lifetime membership for an additional $3,000 fee. while Customer B was a Trading Advantage student, he opened a trading account introduced by Kingsview Futures.
  • Customer B originally thought that Trading Advantage and Kingsview Futures were one and the same firm based on the fact that the person who contacted him from Kingsview Futures was also present on the premises of Trading Advantage and was designated as a Trading Advantage staff member.
  • While a student at Trading Advantage, Customer B attended webinars and live online trading classes which involved watching a Trading Advantage instructor make trades based on entrance and exit signals. The instructor encouraged students to make trades following the same signals and suggested that, if they followed the same signals, they too could be successful traders. The instructor often boasted about being a successful trader and claimed to have only had a few losing months in his almost eight years of trading.
  • Customer B received e-mails from Trading Advantage that suggested that students could make substantial amounts of money through trading and would not need to work a normal job. Many of these e-mails included the following or similar claims:
    • Ever wonder about that “mysterious” neighbor of yours? You know, the guy you constantly see hauling golf clubs into the trunk of his red Porsche convertible? The guy that controls his own destiny? Such is the life of a proprietary trader…If you think this is the type of lifestyle that you might enjoy, I have great news for you…ANYONE can become a “prop” trader…
    • “lf you want to accelerate your path to a career that can provide for your family, has unlimited earning potential and the best hours in the world…”
    • “lf you desire unlimited earning potential, a very flexible work schedule and peace of mind from controlling your own destiny – then it’s time to take the bull by the horns and join us tomorrow.”
  • The e-mails included a risk disclaimer at the end of each message. However, the disclaimer’s smaller font size and location at the end of the e-mails, along with the e-mails’ prominent discussion of profit potential and successful trading, weakened, if not totally neutralized, the effect of the disclaimer.
  • Trading Advantage also maintained a website, whose home page proclaimed, “WHERE TRADERS COME TO LEARN FROM THE BEST” and stated, “The Trading Advantage Online Campus sets you up for success with online trading resources and real-time coaching from some of the toughest, most successful traders in the world.”
  • Another page on the website contained the heading “CHECK OUT OUR STATS” followed by, “Our mentors have some pretty impressive numbers, take a look.” on this and the following page, Trading Advantage advertised year-to-date hypothetical trading profits, ranging from 94,778 to $21,421, which five of its “mentors” supposedly achieved in the first nine months of 2015.
  • The website contained statements at the end of the “trading stats” section, which indicated that the results represented hypothetical signals and that past performance is not indicative of future results. However, these statements were in a smaller font size, were not prominently displayed, and failed to discuss all
    the assumptions made in preparing the hypothetical results. Further, even though Trading Advantage claimed that its “mentors” were some of the “most successful traders in the world”, the “trading stats” section of Trading Advantage’s website did not include the actual trading results of these mentors but instead used hypothetical trading results.
  • Trading Advantage made YouTube videos available on or through its website. While some videos consisted of market commentary, other videos solicited viewers to join and become “successful” traders. In a video entitled, “The Secrets of Successful Trading,” the instructor claimed the “secrets” he learned from other traders made him successful and that his experiences taught him “a lot of valuable lessons” that enabled him “to live the life of [his] dreams.”
  • Throughout the video, instructor made numerous statements referencing wealth and profitability and claimed successful traders live a life of luxury and fly to Las Vegas on the weekends in private jets. The video talked about and included pictures of mansions, yachts and Ferraris. The instructor claimed he would show the viewer how to “follow in [his] footsteps” and said that to be successful in the futures industry “it’s gonna take decisive action on your part and, if you do it, the payoff could be huge.”
  • At the end of the video, The instructor stood in a trading jacket in front of a luxury car, saying he would give the viewer “all of my knowledge, all of my trading tools, everything I have” to help the viewer become a better trader. He concluded by saying, “now is the time for you to join up, join my team,” followed by a screen displaying a quote from Warren Buffet that stated, “l always knew I was going to be rich…” with the telephone number and website address for Trading Advantage posted directly below the quote. The video also displayed other third-party quotes that publicized wealth and success.
  • Trading Advantage included risk of loss disclaimers at the beginning and end of the video. However, the disclaimers were in small-font and appeared only briefly on the screen, and did not come close to balancing the references contained throughout the video regarding the potential profits and success someone could achieve by joining the team at Trading Advantage to learn the “secrets” and knowledge to be a “successful trader.”
  • Trading Advantage also posted testimonials on its website. One testimonial located on the home page and in the “Member Testimonials” section of the website featured Kingsview Futures customer, Customer C. The testimonial shows customer C on a golf course and has him making the following statements, “enjoy the ride – make some money and move on;” trading is “a great way to create the opportunity to have another line of income in your life or to be just great wealth for yourself; “and I am going to start trading for my retired parents as my father is “looking for another line of revenue.”
  • The end of the video testimonial included a notice indicating, among other things,
    that testimonials are believed to be true, but the facts have not been independently audited or verified and that the author of the testimonial was not compensated. However, the video’s overall suggestion of Customer C’s trading success – coupled with the notice’s smaller font size and proximity to the video’s end – minimized the effect of the notice.
  • In his testimonial, Customer C specifically claimed, “I’ve been with Trading Advantage for four years. I’m doing well this year. I’ve made money every single month except for one…” However, at the time the video was posted to YouTube in August 2013, Customer C’s account with Kingsview Futures had only been trading since December 2012 and during this approximate nine-month period, Customer C lost over $8,000 and incurred losses in seven of those months. Customer C’s losses continued through June 2016 totaling more than $40,000.
  • Since Customer C’s trading results conflicted with his testimonial claims, NFA analyzed the overall performance for calendar years 2014 and 2015 of Kingsview Futures’ other self-directed accounts whose account holders had also been Trading Advantage students.
  • 235 Kingsview Futures customers with self-directed accounts traded in 2014. 226 of these customers (or 96%) incurred total losses of more than $1.5 million. Approximately 70% of the customers experienced losses exceeding $1,000; four customers experienced losses exceeding $20,000; and one customer experienced losses exceeding $70,000. In contrast, only nine customers earned profits, with total gains of approximately $43,000. During the same period, Kingsview Futures made almost $257,000 in commissions on these accounts.
  • 217 Kingsview Futures customers with self-directed accounts traded in 2015. 203 of these customers (or 94%) incurred total losses that exceeded $1.9 million. More than 70% of the customers experienced losses exceeding $1,000, and approximately 10% of them experienced losses exceeding $20,000. One customer’s losses exceeded $225,000. In contrast, thirteen customers reported gains in 2015, and only three of them had net profits exceeding $1,000. During the same period, Kingsview Futures made commissions totaling more than $208,000 from these customers.

Please find attached a link for the full Complaint and the NFA Decision



CFTC – Precious Metals and Diamonds Anti-Fraud Action

The Commodity Futures Trading Commission (CFTC) announced a Consent Order against Defendants Jeffrey Slemmer, Christian Dorrian, Adam Roth, and their former respective Florida companies, finding that the defendants fraudulently solicited customers in connection with precious metals and diamonds transactions, misappropriated customer funds, and concealed their fraud with false account statements.

The Court’s Order arises from a CFTC enforcement action filed on May 31, 2016, charging the Defendants with fraud, engaging in illegal, off-exchange transactions in precious metals, and acting as Futures Commission Merchants without registering as such with the CFTC, as required.

Please find attached a link for the full story Precious Metals and Diamonds Anti-Fraud Action

Digital Bitcoin Mining Fraud

Former Connecticut Resident Pleads Guilty to Criminal Charges in Connection With Digital Bitcoin Mining Fraud.

The SEC alleged that GAW Miners and ZenMiner, along with their principal, Garza, purported to offer shares to investors in their digital bitcoin mining operation. Mining for bitcoin or other virtual currencies means applying computer power to try to solve complex equations that verify a group of transactions in that virtual currency. The first computer or collection of computers to solve an equation is awarded new units of that virtual currency. According to the SEC’s complaint, GAW Miners and ZenMiner did not own enough computing power for the mining they promised to conduct, so most investors paid for a share of computing power that never existed. Returns paid to some investors came, not from successful mining activity, but from proceeds generated from sales to other investors.

Please find attached a link for the full story Digital Bitcoin Mining Fraud

SEC Charges Two Brothers With Conducting an Offering Fraud

According to the SEC’s complaint, Michael and Brian Quigley convinced overseas investors to send money to U.S. bank accounts for purported investments in various securities, including well-known issuers, investment funds and penny stock companies, and claimed to be associated with entities that did not in fact exist, including fictional broker-dealers. The SEC alleges that the Quigleys did not make any investments with the money, and instead simply stole the investors’ funds.

Please find attached a link for the full story SEC Charges Two Brothers With Conducting an Offering Fraud

ANOTHER PUMP AND DUMP SCHEME – Fraud in Solar Energy Pump-and-Dump

The SEC’s complaints, allege that, between January 2009 and March 2013, Jeffrey D. Martin of Orlando, Florida and Thomas L. Tedrow of Winter Park, Florida orchestrated a scheme to conceal Mainstream Entertainment, Inc.’s status as a shell company, merge Mainstream with a purported solar energy company and sell millions of purportedly unrestricted shares in the open market, all while flooding the market with false positive information about Mainstream. According to the SEC, Martin and Thomas Tedrow allegedly artificially inflated the price of Mainstream stock through false filings with the SEC, press releases, statements to broker-dealers and transfer agents, and by hiring a stock promoter to cold-call investors using false materials provided by Thomas Tedrow. Martin and Thomas Tedrow also allegedly engaged in matched trading designed to emulate legitimate investor interest in Mainstream while selling millions of shares into the manipulated market. The SEC’s complaint also alleges that Tedrow’s two sons, Christian T. Tedrow and Tyler T. Tedrow, both of Winter Park, Florida, drafted some of the false documents concerning Mainstream and received millions of purportedly unrestricted Mainstream shares that they sold in the open market without registering the shares or having a valid exemption from registration.

Please find attached a link for the full story pump-and-dump scheme involving a shell company


The Securities and Exchange Commission announced fraud charges against two California men and a company behind an alleged scheme to manipulate the stock prices of two shell companies.

The SEC alleges that Troy Flowers and his partner Sean Nevett illegally concealed their control and ownership of Licont Corp. and Artec Global Media by using multiple accounts that they controlled in the names of other people and entities. They then allegedly created the false appearance of active trading by making manipulative trades from those accounts to inflate the stock prices. According to the SEC’s complaint, Flowers and Nevett subsequently dumped their own shares into the open market at the expense of innocent investors, who were left with stock that is virtually worthless.

Please find attached a link for the full story SEC PUMP AND DUMP CHARGES

An Option Advisor who promise to Double or Triple Your Money in Less Than 5 Days

Lately we came across with an email from “Schaeffer’s Investment Research”.

In the email we found the following disturbing promises:

“Double or Triple Your Money in Less Than 5 Days Using This Trading Technique”.

“One of my most popular services, Weekly Options Countdown, consistently drives profits using a strategy that trades weekly options expiring on the first Friday of each month – offering profit opportunities with very modest dollar outlays. With this strategy, you’ll be able to jump start your trading month with six trades aimed to achieve big profits of 100% to 200% in 5 days or less! Last month my Weekly Options Countdown subscribers scored three 100% winners!”

“Click here now to test drive my Weekly Options Countdown for less than $10 and receive 6 primed for profit trades this Sunday!”

“The secret to scoring massive profits in 7 days or less”

“My Schaeffer’s Weekly Options Trader program allows you to play some of the biggest stock movers like AMEX, Tesla Motors, and LinkedIn for just pennies on the dollar. Utilizing a strategy that leverages fast up and down moves, this program targets triple-digit gains in 7 days or less! You’ll be able to target big gains and limit your market exposure using short-term options. In the next month you’ll receive at least 6 trade recommendations, each targeting gains of 100% or more! Normally you’d have to pay $195 to access this program for 30 days, but for a limited time you can try Schaeffer’s Weekly Options Trader for less than $10!”

We strongly advise to be cautious, since options trading is very speculative and risky.

Trading in options is suitable only for those customers who:

  1. understand and are willing to assume the economic, legal and other risks involved.
  2. are financially able to assume the loss of their total investment understand, and are knowledgeable about options trading and the underlying assets.

Moreover, the Recommendations Are Not Guaranteed, and there is No Guarantees Of Profit no matter what they say.

It is unclear why an affiliate of a respectful and regulated brokers, is making such disturbing promises.