The SEC Nails Investools
One of the subjects I dealt with in Wall Street Versus America was how investors had been preyed upon by phony investment seminars, which were little more than schemes that parted investors from their money. One of the grimier efforts was "Investools," which put on seminars using tie-ins, now severed, with CNBC and BusinessWeek.
After an investigation that dragged on for over a year and a half, today the SEC announced that it settled securities fraud charges against Investools for "misrepresentations at investor workshops." The fine is the usual SEC wrist slap, with Investools pledging to stop doing stuff that it didn't admit to doing in the first place.
The Commission's complaint alleges that from 2004 to approximately June 2007 at Investools how-to-trade-securities workshops former Investools employees Drew and Miller misleadingly portrayed themselves as expert investors who made their living trading securities. They did so to mislead investors into believing that they too would make extraordinary profits trading securities if they purchased expensive Investools instructional courses and other products and followed Investools' securities trading strategies. The complaint further alleges that in reality, neither Drew nor Miller made the trading profits they claimed. For example, in 2005 and 2006, while Drew was portraying himself as a successful investor, he had hundreds of thousands of dollars in net trading losses. In 2006 and 2007, while Miller was portraying himself as a successful investor, he had tens of thousands of dollars in net trading losses.What made Investools especially interesting was its murky corporate history, as successor to a company called Ziasun that used to intimidate critics through lawsuits against critics on message boards.
That was one hell of a red flag, and the SEC got right on the case. How long did it take since Ziasun was on the warpath.... ten years?
© 2009 Gary Weiss. All rights reserved.