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Bogus promises to extract cash from bankrupt biz

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The North American Securities Administrators Association (NASAA) has closed down a website that was using its content to dupe investors.

The association, which is an international group that aims to protect investors, issued a cease-and-desist letter to the State Securities Commission website, which seemed to be posing as a national regulator to trick people.

“Several fake regulator websites have been brought to the attention of state and federal securities regulators in recent years,” Jack Herstein, president of the NASAA, said in a canned statement. “Many of these sites purport of offer relief to investors. In reality, they are fronts for con artists posing as regulators.”

“We are concerned that con artists are attempting to cash in on our reputation for effective investor protection to lure others into an illicit scheme,” he added.

The website, statesec.org, now appears to be shutdown, but you can still see a cached version here, which said:

The State Securities Commission either acts as trustee or works with an independent court-appointed trustee in a missing asset case to recover funds. The statute that created SSC provides that customers of a failed brokerage firm receive all non-negotiable securities that are already registered in their names or in the process of being registered.

The site also has a news section and investor alerts, which Herstein said were slightly modified versions of recent NASAA news releases and alerts. It adopted information from other securities sites such as the Securities Investor Protection Corporation (SIPC) as well.

The commission also claims to consist of "the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the US Virgin Islands, Canada and Mexico", NASAA said, and that it "was chartered by Congress to combat fraud".

“This information is patently false,” Herstein said. “Cons will go to great lengths to make themselves appear legitimate.”

Any investors who want to make a claim through the commission are asked to include a copy of their most recent brokerage account statement, along with copies of confirmation slips for securities transactions, correspondence and other documentation. Some investors also are asked to include a check with their completed forms.

“Requests to submit personal account information and money to a ‘regulator’ are red flags of investment fraud,” Herstein said. ®

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