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.

The SEC Hones in on Investools

In Wall Street Vs. America I describe how two leading business news outlets -- CNBC and BusinessWeek -- loaned their name to an operator of useless investment workshops called Investools. What made this relationship even scuzzier was that Investools has a murky corporate history, and its corporate predecessor, a penny stock outfit called ZiaSun, engaged in a protracted legal campaign against critics.

The CNBC and BW connections are a thing of the past, and today Investools disclosed that it is the subject of an informal inquiry by the SEC. The securities watchdogs are examining "representations by certain presenters in certain portions of their presentations at some of the company's seminars."

Evidently the SEC finally got around to reading Wall Street Versus America or this FINRA investor alert. There are plenty more seminar operators out there worthy of scrutiny, needless to say.

Investools says that it is changing its name to Thinkorswim Group Inc. I think "Sinkorswin" might be a better name. Emphasis on "Sink."

© 2008 Gary Weiss. All rights reserved.