SEC Nails MN-Based Currency Trading Fraud

Posted by

The SEC nailed a Minnesota-based currency fraud today, a bust that I believe will be the opening salvo in a much bigger battle to protect Americans from this burgeoning area of fraud.

SEC Obtains Asset Freeze in Minnesota-Based Foreign Currency Trading Scheme

FOR IMMEDIATE RELEASE
2009-253

Washington, D.C., Nov. 24, 2009 — The Securities and Exchange Commission has obtained an emergency court order freezing the assets of a self-proclaimed Minneapolis-based money manager, a nationally syndicated radio personality and four companies they controlled in a foreign currency trading scheme that raised at least $190 million from more than 1,000 investors.

The SEC alleges that Trevor G. Cook and Patrick J. “Pat” Kiley sold unregistered investments through shell companies by misrepresenting that they would deposit each investor’s funds into a separate account in the investor’s name to trade in foreign currencies and generate annual returns of 10 percent to 12 percent. They also misrepresented that their foreign currency trading program involved little or no risk and that investors’ principal would be safe and could be withdrawn at any time. Kiley pitched the investments on his financially themed “Follow the Money” show that he hosted on radio stations nationwide.

As I mentioned in my piece “3 Potential Bubbles for Retail Investors“, currency and forex trading has historically been only lightly regulated in terms of sales practices.  As a result, many fraudsters from other industries have jumped on the bandwagon. 

There is a ton of leverage employed in even the most common strategies and with daily headlines trumpeting the weak dollar, individuals are being led like sheep to the slaughter into this arena.

I applaud the SEC for shutting down this ponzi scheme and I hope everyone reads the full press release before sending money to someone who represents currency speculation as “riskless”.

Source:

SEC Obtains Asset Freeze Against MN Currency Scheme (SEC.Gov)

Read Also:

3 Potential Bubbles for Retail Investors (TRB)

Tags: , , , ,

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. 5d diamond painting commented on Dec 17

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2009/11/25/sec-nails-mn-based-currency-trading-fraud-i-predict-this-will-be-the-first-of-many/ […]

HowIInvestMyMoney