Kudos to the SEC!

I sometimes see what appears to be obvious manipulation in the stock markets, and I get upset when the SEC seems to turn a blind eye towards it. I had an excellent interaction with the SEC Enforcement Division this morning, and I believe they deserve kudos. So I am posting this to share with the world their excellent work.

I am a General Partner in a venture capital investment fund. Yesterday morning, I received a telephone call from a man in Norway, saying that he had purchased stock from a law firm calling itself the name of my venture fund. He had send payment to them via wire transfer, but had not received any shares of stock. He was trying to track down the status of his purchase. He gave me the url for the web site of this supposed law firm, which included addresses in Hong Kong and in California – and the California address that they listed was the original address of my venture fund (an address that we moved out of over 8 years ago).

Since this organization impersonating my venture fund was claiming to be a law firm, I first called the California Bar Association. They said that they only had jurisdiction over real lawyers, not fake lawyers. They suggested that I contact the local district attorney. I called the local district attorney, who told me that stock fraud was under the jurisdiction of the SEC and referred me to SEC Enforcement.

This was getting frustrating!

I sent SEC Enforcement a detailed memo with all of the facts that I had in the middle of the day yesterday. By the time I arrived in the office this morning, I had a voicemail from an SEC Enforcement Officer. I just got off the phone with him. He had already had a long conversation with the defrauded investor in Norway, had already tracked the wire transfer from Norway to its destination in Asia, and had already talked with the appropriate regulators in that jurisdiction to track the recipients. All of this had been done, and fewer than 24 hours had elapsed since my initial contact to the SEC!

Unfortunately, this type of financial scam is all too common, The SEC even has a link on the front page of their web site to known scams, and the entity impersonating my fund will be added to that page with a notation that they are not in any way affiliated with my fund.

The SEC Enforcement officer suggested that I contact the Registrar of the fake web site and demand that it be taken down, and said that if they had any questions about whether or not that site was fraudulent then I should have them call him. He also said that if any other people contact us, we should refer them to the SEC, giving me a special email address and telephone number to give them.

I was very impressed with the speed and professionalism that SEC Enforcement took in dealing with this situation. I hate that anyone needs to deal with things like this, but thank goodness that there are public servants who know about this type of scam and react to quickly and so well. In my opinion, this is our tax dollars working well.


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