Investor's Watchdog.com: Stock, finance and investment protection for investors

According to the U.S. Securities and Exchange Commission (”SEC”), Massachusetts-based State Street Bank and Trust Company (”State Street”) misled investors about the extent of subprime mortgage-backed securities in funds managed by State Street.  Conservative investors who thought they were investing in money market equivalent funds wound up owning funds full of extremely risky subprime mortgages.  According to the SEC, investors lost more than $300 million through investment in those funds.  Specifically:

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The investment likely seemed especially safe: stock in a company that produced children’s books.  According to Winning Kids, Inc., the company was well established, expanding nationally, and starting and acceleration phase of extraordinary growth.  According to the U.S. Securities and Exchange Commission, none of that was true.  The SEC has charged Winning Kids, its founder and CEO, Christian Haynesworth, and three sales agents, Robert Comiskey, Edward Tamimi, and Victor Selenow, with securities fraud. According to the SEC, the defendants raised approximately $2 million from approximately 200 investors nationwide, drumming up interest through radio commercials and promising investors attractive returns while failing to mention that the sales agents received commissions of up to 20 percent of the amount invested.  The SEC also alleges that Haynesworth used investor funds for personal expenses.

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The U.S. Securities and Exchange Commission has charged securities lawyer Stephen Czarnik of assisting with multi-million pump-and-dump stock schemes which “allowed three stock promoters — Ryan Reynolds, Jason Wynn and Carlton Fleming — to purchase millions of shares of stock in three penny stock companies for pennies per share, hype the companies through promotional mailers and other advertising, and illicitly sell their shares to the public for millions of dollars in profits.”

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David Wehrs told prospective investors that he would place their money in an FDIC-insured money market fund that guaranteed to pay 10.85 percent interest annually.  Thirteen investors believed him and lost more than $1.9 million.  The U.S. Securities and Exchange Commission has filed an enforcement action against Wehrs and his company, Maryland Title and Escrow Co., and the local U.S. Attorney’s Office has filed a criminal information against Wehr.

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The SEC has charged Medical Capital Holdings, Inc. (”MCH”) with fraud.  Massachusetts Secretary of State has charged Securities America, Inc. with helping to sell MCH’s alleged fraud. Read the rest of this entry »

Imagine the scene:  Jack Bauer, wounded but still on the job, gets a call from Chloe O’Brien notifying him that he has been defrauded of more than $800,000 in a Ponzi scheme.  How do you think Jack would respond?  Likely in ways that Keifer Sutherland, the actor who plays Bauer, cannot. Read the rest of this entry »

Have you ever reviewed a financial statement?  Did it matter to you whether it was audited?  Most investors would rather see audited statements so that they can be sure a qualified accountant has tested the representations in the statements. Who wouldn’t want to see audited statements?

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People who bought shares of East Delta Resources Corp. in 2004 and 2005 were happy.  As the price of one share of East Delta rose from 25 cents per share to more than one dollar per share, they may have wondered just how many times their money would double.  The trading volume data showed that lots of people were buying the stock of the mining company.  And why not? Press releases from East Delta showed that the company was doing well and that the stock was a “can’t miss” opportunity to make profits of several hundred percent.

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Registered investment advisers (RIAs) are different from stockbrokers; at least they are supposed to be.  RIAs owe you a fiduciary duty, which means that they are supposed to put your interests first and disclose any possible conflicts of interest.  But many investment advisers do not live up to that duty.  The U.S. Securities and Exchange Commission has obtained judgments against two stockbrokers who paid bribes to investment advisers to induce them to use those stockbrokers in placing trades for their clients accounts.  According to the SEC and U.S. District Judge P. Kevin Castel David Harrison Baker, Daniel Schrieber, and Schrieber’s firm, Granite Financial Group, paid bribes to two RIAs, Brian Travis and Nicholas Vulpis.  According to the SEC’s complaint:

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The U.S. Securities and Exchange Commission has charged Summit Advisory Partners and its managing partner, Robert Feeback with directing an illegal pump and dump scheme.  According to the SEC, the scheme allowed three stock promoters, Ryan Reynolds, Jason Wynn and Carlton Fleming, to make millions by purchasing shares cheap, hyping the companies with false press releases, and then selling to the public at inflated prices.

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