The Securities and Exchange Commission has put out an emergency enforcement action to stop a pyramid scam that has already taken $300,000 from about 150 investors in the US. The scheme involves bogus companies pretending to be an international investment firm. Customers were solicited via Twitter, Skype, Facebook, and YouTube.
Now, the SEC has gotten a federal court order freezing the holding the funds that purportedly were stolen from investors by MWF Financial and Fleet Mutual Wealth Limited, known together as Mutual Wealth. The regulator claims that the company used social networking and its website to target investors, making false promises of returns of 2 to 3% a week if they opened accounts with the firm.
According to the Commission, Mutual Wealth made its fraudulent pitches via social media. Misrepresentations were published on the company’s Facebook page, including data about income yields of up to 8% weekly and HFT portfolios with ROI of a maximum of 25%/annum. Mutual Wealth purportedly touted its use of a high-frequency trading strategy that lets capital be put into securities for just minutes at a time. The company offered a commission or referral fee if investors became “accredited” and brought in new investors.
Now, however, the SEC is saying that everything Mutual Wealth told investors was false. The company doesn’t sell or buy securities for investors. Instead, the money was allegedly diverted into shell company-held offshore accounts. Also, Mutual Wealth’s headquarters, supposedly in Hong Kong, its data center in New York, and the executives listed on its website all do not exist. The SEC says that Mutual Wealth is not registered with the regulator. The SEC is charging Mutual Wealth with violating sections of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5.
If you believe you were scammed via social media or some other social network and have lost money on your investment as a result, please contact our securities fraud law firm so that we can help you explore your legal options.
SEC Halts International Pyramid Scheme Being Promoted Through Facebook and Twitter, SEC.gov, March 5, 2014
Read the SEC Complaint (PDF)
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Ex-Merrill Lynch Adviser, Already Jailed for Massachusetts Securities Fraud, Now Indicted Over Ponzi Scam, Stockbroker Fraud Blog, March 4, 2014
North American Securities Administrators Association Releases 2013 List of Top Threats to Investors, Stockbroker Fraud Blog, October 22, 2013
US Supreme Court Hears Oral Argument on the Impact of SLUSA on the Stanford Ponzi Scams, Institutional Investor Securities Blog,