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Thanks. This may sound dumb, but why didn't Anson just pay Left to do his research, and publish it? And if Left wanted to short the stock, then so what?
Related to the Left/Citron charges was this SEC Administrative Action from last month that largely went unnoticed at the time. "Individual A" is undoubtedly Left and Citron, as the specific short reports and Tweets mentioned in the Order were done by Citron. The Order also says Anson worked with "Short Publishers", plural. This may signal more firms are in the SEC's crosshairs.
https://www.sec.gov/files/litigation/admin/2024/ia-6622.pdf
On the basis of this Order and the Respondents’ Offers, the Commission finds that:
Summary
1. These proceedings arise from the Respondents’ work with activist short publishers who issue reports presenting bearish views of target securities (“short reports”). From at least 2018 through 2023 (the “Relevant Period”), the Private Placement Memorandum (“PPM”) for Anson Investments Master Fund (“AIMF”), the private flagship fund that Respondents advised, described a short position investment strategy to be used for AIMF but omitted that AIMF’s investment strategy involved working with activist short publishers and trading in the target securities, including around the time the reports were issued by activist short publishers, and paying a portion of AIMF’s trading profits to the short publishers in exchange for the short publishers sharing their work with Respondents in advance of posting it publicly. In addition, by not disclosing this practice, Anson Funds did not implement its written policy to “clearly articulate” AIMF’s short strategy or the risks associated with this strategy, in violation of the Advisers Act.
2. In addition, in September and October 2018, Anson Advisors agreed to pay “Individual A,” the principal of a short activist firm (hereafter, “Short Publisher A”), a share of AIMF trading profits in connection with Short Publisher A’s bearish reports and tweets on two securities. As a result of AIMF’s trading, Individual A’s share of AIMF’s trading profits exceeded $1.1 million, which Respondents paid through a third-party intermediary via invoices for purported research services that the third-party intermediary had not performed. Anson Funds inaccurately recorded these payments as payments to the third-party intermediary for such research services and in doing so violated the Advisers Act books and records provisions. Further, by failing to implement its written policies regarding the accuracy of records, Anson Funds violated the Advisers Act compliance rule.
3. As a result, and as detailed below, Anson Advisors violated Section 206(4) of the Advisers Act and Rule 206(4)-8 promulgated thereunder, and Anson Funds violated Sections 204 and 206(4) of the Advisers Act and Rules 204-2, 206(4)-7, and 206(4)-8 promulgated thereunder.
Respondents
4. Anson Funds Management, LP is a limited partnership organized under the laws of Texas with a principal place of business in Dallas, Texas. Anson Funds was founded in 2003. It has been registered as an investment adviser with the Commission since 2012 and as of March 2024 reported having approximately $2.5 billion in regulatory assets under management.
5. Anson Advisors, Inc. is a corporation organized under the laws of Ontario, with a principal place of business in Toronto, Canada. Anson Advisors was founded in 2007. Anson Advisors is registered with the Ontario Securities Commission and has reported to the Commission as an exempt reporting adviser since 2013. Anson Advisors and Anson Funds are co-investment advisers of a number of private pooled investment vehicles, including AIMF.
Other Relevant Entities and Persons
6. Anson Investments Master Fund LP is the Respondents’ flagship fund and a Cayman Islands limited partnership.
7. Short Publisher A is an activist short publisher that presents itself to the market as an independent research firm. Short Publisher A purports to expose frauds or other problematic conduct at target companies through its own website and twitter feed.
8. Individual A founded Short Publisher A around 2008 and has been writing and disseminating reports and tweets through that platform since its inception.
AIMF’s Private Placement Memorandum
9. During the Relevant Period, the Respondents were co-investment advisers of private pooled investment vehicles, including AIMF. They received an asset-based management fee and performance-based compensation from their clients. The Respondents worked together to determine fund strategy, manage risk, communicate with investors, and to draft marketing materials. Anson Advisors was primarily responsible for making investment decisions, while Anson Funds was primarily responsible for operational and administrative tasks, such as financial and compliance functions for both firms pursuant to a shared services agreement. The shared services agreement contractually obligated the Respondents to provide each other certain support services in connection with the day to day legal, compliance, and operations of each party.
10. The Respondents’ investor materials describe AIMF as a long-short fund, meaning the fund employed a strategy of taking both long and short positions in certain securities to enhance returns. The PPM for AIMF, which Respondents prepared and sent to actual and prospective investors to solicit investment in the fund, described the AIMF short position investment strategy as “scour[ing] the market using various data filters and screens to identify companies with significant short-term stock price appreciation that we believe is not justified by a corresponding improvement in underlying businesses prospects” and “monitor[ing] larger industry trends” to take short positions in companies the Respondents “expect to suffer the same decreased stock price and then hold the positions until the stock prices decreases to reflect the industry-wide decline.”
The Respondents’ Practice of Working with Activist Short Publishers
11. During the Relevant Period, the Respondents worked with activist short publishers who released reports presenting bearish information about target companies. These short reports were often posted on independent social media sites operated by the short publishers.
12. Respondents had formal consulting agreements with some of the short publishers, which at times provided that the short publisher would share its work with Respondents prior to public posting. In exchange, Respondents agreed to pay the short publisher, at times based on a percentage of AIMF’s profits from trading in the target security for an agreed period of time around the publication of the report.
13. Anson Advisors directed trading by AIMF. Generally, AIMF would secure a short position prior to the release of the reports. The price of the target securities often decreased after the reports were published, and AIMF would often cover its short position for a profit.
Anson Funds was aware of the arrangements and monitored AIMF positions and the share of AIMF profits owed to the short publisher pursuant to the agreements.
14. At other times, Respondents had informal arrangements with short publishers whereby they would exchange research and content with the short publishers, but would not enter into a formal consulting agreement with them.
Respondents’ Relationship with Individual A and Short Publisher A
15. During the Relevant Period, Respondents at times worked on an informal basis with Short Publisher A, which was operated by Individual A. In late 2018, Respondents paid Individual A a portion of AIMF’s trading profits regarding two securities in connection with Short Publisher A’s reports and tweets regarding those securities.
16. In September 2018, Anson Advisors contacted Individual A about Short Publisher A issuing bearish reports on Namaste Technologies, Inc. (“Namaste”), a company whose securities traded on the Canadian Securities Exchange. Namaste’s securities were also quoted on the OTC Link under the symbol “NXTTF.” Anson Advisors and Individual A worked together to prepare two bearish reports and tweets, which Short Publisher A published in September and October 2018. In exchange, Anson Advisors agreed to pay Individual A a share of AIMF’s profits from its short position in Namaste. AIMF’s short positions in Namaste in September and October generated approximately $3.8 million in profits.
17. In October 2018, Anson Advisors agreed to pay Individual A a share of AIMF’s profits from trading around Short Publisher A’s bearish tweet on India Globalization Capital, a company whose securities traded on the NYSE American stock exchange under the symbol “IGC.”
Short Publisher A published a bearish tweet regarding IGC in early October 2018, stating that the stock was overvalued. AIMF’s short positions on the day of the tweet generated approximately $500,000 in trading profits.
18. As a result of AIMF’s trading in Namaste and IGC, Individual A was owed more than $1.1 million of AIMF’s trading profits. Individual A did not pay or contribute funds to Respondents to purchase securities in either Namaste or IGC. Individual A asked Anson Advisors to send him his share of trading profits through a third-party intermediary, to which Respondents agreed. The third-party intermediary provided Anson Funds with invoices for purported research services that had not been performed by the third party intermediary and inaccurately stated that the amounts invoiced were for the benefit of the third-party intermediary, when they were for the benefit of Individual A. Anson Funds issued payment to the third-party intermediary, and Individual A collected payment from that third-party intermediary.
Respondents’ Omission of Their Work with Activist Short Publishers Rendered the PPM’s Description of Investment Strategies Misleading
19. The PPM for AIMF, which Respondents prepared and sent to actual and prospective investors, described a short position investment strategy for AIMF but omitted that AIMF’s investment strategy involved working with activist short publishers and trading in the target securities. The PPM for AIMF did not disclose this strategy, including that Respondents entered into agreements with activist short publishers and would compensate some short publishers by paying them a share of AIMF trading profits.
20. Respondents’ agreements with and payments to short publishers, including Individual A, was information that investors would have found material. The omission of this conduct from the AIMF PPM, which was not available to investors through other means, rendered its statements about its short strategy misleading.
Anson Funds Failed to Maintain Accurate Books and Records and to Follow Its Policies and Procedures
21. Anson Funds inaccurately recorded the payments for the benefit of Individual A in its journal and ledgers as payments to the third-party intermediary for research services, when in fact they were to Individual A for trading profits.
22. Anson Funds’ compliance policies and procedures required the keeping of accurate books and records. Among other things, this included restrictions on using money or approving transactions when the funds would be used for purposes other than those described. Anson Funds failed to implement this policy when it approved and paid Individual A through the third-party intermediary.
Anson Funds Failed to Implement its Compliance Policies and Procedures Regarding Accurate Disclosure of Fund Strategies
23. Anson Funds adopted compliance policies and procedures requiring it to “clearly articulate” in the PPMs for the pooled investment vehicles it managed, its investment strategies; these policies and procedures required the firm to provide “disclosure as to how funds are to be invested, what factors will influence investment performance and what risks are associated with the Account’s principal investment strategy.”
24. By omitting from the description of its short strategy in the PPM its practice of working with short publishers and paying them a share of AIMF trading profits, Anson Funds did not “clearly articulate” its short strategy or the risks associated with this strategy.
Violations
25. As a result of the conduct described above, Anson Advisors and Anson Funds willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-8(a)(1) and (2) thereunder, which makes it unlawful for any investment adviser to a pooled investment vehicle to (1) make any untrue statement of a material fact or to omit to state a material fact necessary to make the statements made not misleading, or (2) otherwise engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative with respect to any investor or prospective investor in the pooled investment vehicle. Proof of scienter is not required to establish a violation of Section 206(4) of the Advisers Act or the rules thereunder. S.E.C. v. Steadman, 967 F.2d 636, 647 (D.C. Cir. 1992).
26. As a result of the conduct described above, Anson Funds willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, which require registered investment advisers to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder.
27. As a result of the conduct described above, Anson Funds willfully violated Section 204 of the Advisers Act and Rules 204-2(a)(1) and (2) thereunder. Section 204 of the Advisers Act requires investment advisers to make and keep certain records and furnish copies thereof, and to make and disseminate such reports as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. Rule 204-2 provides that investment advisers registered or required to be registered shall make and keep true, accurate and current books and records in specified categories.
In view of the foregoing, the Commission deems it appropriate and in the public interest to impose the sanctions agreed to in Respondents’ Offers.
Accordingly, pursuant to Sections 203(e) and 203(k) of the Advisers Act, it is hereby ORDERED that:
A. Anson Funds cease and desist from committing or causing any violations and any future violations of Sections 204 and 206(4) of the Advisers Act and Rules 204-2(a), 206(4)-7, and 206(4)-8 promulgated thereunder.
B. Anson Advisors cease and desist from committing or causing any violations and any future violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 promulgated thereunder.
C. Respondents are censured.
D. Respondent Anson Advisors shall, within ten days of the entry of this Order, pay a civil money penalty in the amount of $1,000,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 3717.
E. Respondent Anson Funds shall, within ten days of the entry of this Order, pay a civil money penalty in the amount of $1,250,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. 3717.
That's interesting, though the link didn't work for me. Here's more:
https://www.nasa.gov/podcasts/houston-we-have-a-podcast/advanced-oxygen-generation/#:~:text=So%20each%20crew%20member%20requires,that%20oxygen%20that%20gets%20consumed.
I believe it's designed to generate it's own oxygen supply and urine is recycled into drinking water.
https://abcnews.go.com/US/nasa-98-astronauts-urine-sweat-recycled-drinking-water/story?
In addition to TP I would imagine tampons are in short supply.
Are they allowed to buy stocks? Or do they have to ask you for permission.
Well I hope they didn't own Boeing. That ship sank years ago.
Yes that would be hilarious. And great advertising. But VERY expensive.
It would be a good ad for Instacart to deliver to the space station by hiring Space X. And while they are there they could bring home the 2 astronauts.
Updated astronaut quotations:
(May-June): "If it's Boeing, I'm not going."
(July-Aug-???) "If it's Boeing, I'm staying."
https://en.wikipedia.org/wiki/Marooned_(1969_film)
And for those poor souls trapped in the besieged inner-city enclave/fortress/citadel of UChicago, they are also Marooned
Even Lou Malnati's will nott deliver there - even with armed escort convoys - must buy frozen only for the Khe Sanh-like Hyde Park. The space station astro/cosmonauts have a better chance getting delivery of a Lou Malnati's pizza (via Space-X or Roscosmos) than do the hunkered-down bunker rats in Hyde Park/UChicago campus.
"3M Jumps Most in 36 Years as New CEO Boosts Profit Forecast"
(Bloomberg) -- 3M Co. soared the most in more than 36 years after raising its full-year profit forecast as its new chief executive officer vowed to reinvigorate the iconic manufacturer’s innovation engine.
The shares jumped as much as 16% as of 9:36 a.m. in New York, the most since 1987. The gains came after the maker of Post-it notes and industrial adhesives said adjusted earnings this year would be between $7.00 to $7.30 per share as it reported second-quarter results. That boosted the midpoint of 3M’s forecast to $7.15, up a dime from its previous outlook.
The results are the first under CEO Bill Brown, who succeeded Mike Roman on May 1. Brown inherited a much smaller company following the spinoff of 3M’s huge health-care products division unit amid massive legal liabilities.
Brown kicked off his first earnings call by stressing the need to accelerate 3M’s sales growth. To get there, he wants to increase the pace of new product development.
https://finance.yahoo.com/news/3m-boosts-profit-forecast-ceo-105728844.html
Wow, Dow soars over 750 points
"US stocks rose during afternoon trading Friday and were poised for a comeback as investors embraced new pricing data that showed inflation continuing to ease, solidifying expectations for coming interest-rate cuts.
The Dow Jones Industrial Average (^DJI) added 1.7%, or more than 600 points. The S&P 500 (^GSPC) rose about 1.2%, while the Nasdaq Composite (^IXIC), put on 1.1, although both indexes headed for weekly losses."
https://finance.yahoo.com/news/stock-market-news-today-dow-rises-600-points-after-key-fed-watched-inflation-data-133055434.html
FINGERS CROSSED ;)
Harvard Law grad Munger hated trading stocks.
Last I looked he is dead. But please post when they settle his estate along with his tax payouts.
You are still clueless as to how other people trade, what accounts they trade out of or how they are invested.
Why don't you post in dollars and cents how much holding Boeing has cost you from it's all time high.
Do you understand the concept of not giving money back?
Something will be done pretty soon, probably. Well before they need an oxygen delivery. More important even than TP.
Plain ole stock manipulation. "If convicted, Left would face a statutory maximum sentence of 25 years in federal prison for the securities fraud scheme count, up to 20 years in federal prison for each count of securities fraud, and up to five years in federal prison for the false statements count."
"Analyst Indicted for Alleged Scheme to Manipulate Stock Market via Media Campaigns Then Trading Contrary to His Public Positions"
Classic
https://www.justice.gov/usao-cdca/pr/analyst-indicted-alleged-scheme-manipulate-stock-market-media-campaigns-then-trading
And that includes the QQQ I bought them around 2010... about a 12 bagger currently.
"Neither of my sons has ever sold a stock. Some held since their births."
It's time to bring them home. The whole purpose of having two vendors in the game was because of things like this. Boeing's mission has failed and Space X needs to rescue the crew and restock the toilet paper.
Neither of my sons has ever sold a stock. Some held since their births. Mostly tax advantaged index funds..
You obviously don't know how to trade stocks. All my accounts are yielding well over 11% YTD. Considering most are held in tax deferred accounts your post which I doubt is copyrighted is BS. Do the math. Oh you can't lol.
How is Boeing working out for you.
And maybe stuff like food. It would not be fun to wonder, even just a little bit, whether you might be stuck.
Harvard Law grad Munger hated trading stocks. Even more than Buffett did. You want to die with tons of capital gains.
It may. Though I'm sure they all knew they were being investigated. But I'm not sure how many others communicated with the public to the extent Left did. Are there others with active Twitter accounts full of explicit trading information (true or untrue)?
When I worked for TheStreetSweeper, the policy was that the authors of articles about bad stocks--Melissa and I--would not trade them. The people shorting the stocks written about informed Melissa when they took a position, and she disclosed that at the foot of the article. And when they covered, in whole or in part, that was also disclosed.
But nobody was going on about it daily at Twitter or on any similar site.
Time to call Space X. By now they must be running out of toilet paper.
Gives new meaning to the word “floater”…
Time to call Space X. By now they must be running out of toilet paper.
We know that back when there was talk of an SEC/DOJ investigation of some shortsellers--remember the annoying Joshua Mitts?--in 2021 and 2022, Left said he was going to stop writing reports about short targets?
Now we know why...
I wonder about the possibility that all of this might place a bit of a chill under the other "short shops" out there.....
"The More You Trade, The More You Lose" © Bar1080 .Check the tax code
Club Fed, perhaps?
I sold a chunk of F before earnings and bought back a chunk this morning. I own 3. Some of the recalls which is all warranty work are over done when scheduling an appointment.
The steering wheel may come off in your hands.
The door latch may not work.
The seatbelt may fail.
The brake hoses may fail.
The fuel injectors may crack and cause an engine fire. But that is a voluntary recall. lol.
The car needed a software update to fix something which I'm still not clear on.
Ford now deploys mobile vehicles to fix most of the above at your home.
I'd still buy a Ford before I flew in a Boeing.
NASA says no return date yet for astronauts and troubled Boeing capsule at space station..
If I were they, by now I'd be making enquires with the Russians about a ride home.
You bet
"Now that is interesting".
Shades of Martha Stewart:
...and one count of making false statements to federal investigators.
Now that is interesting.
That looks like a good buy after the sell off yesterday. Ford is notorious for running up to earnings then disappointing. I've played it like a yoyo for years.
"If convicted, Left would face a statutory maximum sentence of 25 years in federal prison for the securities fraud scheme count, up to 20 years in federal prison for each count of securities fraud, and up to five years in federal prison for the false statements count.
The FBI and the United States Postal Inspection Service are investigating this matter
NASA says no return date yet for astronauts and troubled Boeing capsule at space station
MARCIA DUNN
Updated Thu, July 25, 2024 at 1:33 PM EDT·2 min read
https://www.yahoo.com/news/nasa-says-no-return-date-154443208.html
Just don't invest in Boeing.
GM is also down for the week as is Tesla. I never wait for Ford's earnings reports.
https://stockstotrade.com/buy-the-rumor-sell-the-news/
"why did Raytheon feel the need to rebrand ????"
No idea. The company has had many product zigs and zags since it was founded in the 1920s.
https://en.wikipedia.org/wiki/Raytheon
Creedmoor was a place where we threw away people and simply locked them up simply because they were different. Imagine walking into a room with 10 little autistic kids no higher than your thigh all wearing football helmets. Then imagine one of them coming up to you and grabbing your wrist looking for help.
I should have scooped the kid up and ran like hell. After college I wandered around for a while but got engaged with the Special Olympics and helped foster a young woman who new my GF knew who lived in a group home who had downs syndrome. Her parents had abandoned her like the kids at Creedmoor.
As it turned out my Philosophy major ended up with my career in banking since I met a Phd in Philosophy from BU who was also a director of a bank and he got me my first job in banking.
I still remain active with Special Olympics due to that one field trip in college decades ago.
The SEC Bites
https://www.sec.gov/newsroom/press-releases/2024-89
“Andrew Left took advantage of his readers. He built their trust and induced them to trade on false pretenses so that he could quickly reverse direction and profit from the price moves following his reports,” said Kate Zoladz, Director of the SEC’s Los Angeles Regional Office. “We uncovered these alleged bait-and-switch tactics, which netted Left and his firm $20 million in ill-gotten profits, and we intend to hold Left and his firm accountable for their actions.”
Dealing with gadolinium toxicity..
GAWD... I wish I could taste anything properly...
One has to ask... why did Raytheon feel the need to rebrand ????
That's amazing. $2 billion?? It certainly seems that one thing crypto's made much easier is securities fraud.
Canadian company at the centre of alleged international pyramid scheme: authorities
Ah, the usual fingerprints of a financial scam. Fake Directors using a Regus address, registered by a scam facilitator business service who doesn't ask any questions (or confirm the people are real), using fake websites to fool people into thinking they had real investments that were turning profits. But this one was different than most. This one stole at least $2 billion, and most likely at least double that, all from hundreds of thousands, if not millions, of relatively poor "investors" in Southeast Asia, all out in the open.
https://www.ctvnews.ca/canada/canadian-company-at-the-centre-of-alleged-international-pyramid-scheme-authorities-1.6974263
Editor's note: This story is a collaboration between the Investigative Journalism Foundation (IJF(opens in a new tab)) and CTV News.
A Canadian company is at the centre of an alleged pyramid scheme that foreign officials say stole more than US$2 billion from hundreds of thousands of people in Sri Lanka and Bangladesh, according to authorities in those countries.
Metaverse Foreign Exchange Group Inc., also known as MTFE, pitched itself as a reputable online trading platform. The company is federally incorporated in Markham, Ont., has a Canadian director and is even registered with Canada’s money laundering watchdog.
But in August 2023 the platform stopped working and investors' money disappeared, according to court documents filed in Sri Lanka. Sri Lanka’s central bank has since described MTFE as a pyramid scheme.
Now, an investigation from the Investigative Journalism Foundation and CTV News shines new light on how Canadian shell companies and registries were used to pull off the scheme.
Canadian lawyers play key role in money laundering, says financial intelligence report: IJF & CTV News(opens in a new tab)
The investigation — based on dozens of corporate filings, interviews with experts and both domestic and international court records — found MTFE was part of a network of dozens of Canadian shell companies peddling similar cryptocurrency investment schemes.
Most of those companies had foreign directors, and experts interviewed for this story suspect some used fake identities.
Efforts to locate MTFE’s sole Canadian director, Randy Mathieu Lane, who had a listed address in Richmond, B.C., were unsuccessful.
Corporate records show Lane is a listed director of six Canadian companies including MTFE, all offering cryptocurrency or other financial services. In five of those registrations, including the one for MTFE, the other listed director had an address in China .
Four of Lane’s companies were dissolved by Canadian officials for non-compliance in May, shortly after the IJF and CTV News contacted the federal department that runs the corporate registry seeking comment for this story.
Agencies including the RCMP, the Ministry of Finance and the Ontario Securities Commission would not answer direct questions about MTFE or whether Canadian officials are investigating MTFE.
But experts interviewed for this story, including former law enforcement and intelligence officials, say the investigation highlights gaps in Canada’s enforcement that have made the country a waystation for financial crime.
“We’ve become such a weak link in the financial crime arena that we’re attracting all the business,” said Garry Clement, a former RCMP officer who investigated financial crime. “Because they know that virtually nothing is going to happen to them.”
Behind MTFE
Arif, a 22-year-old in Dhaka, Bangladesh, made his first investment on Metaverse Foreign Exchange in January 2023.
MTFE’s website claimed to use artificial intelligence to trade foreign currencies on behalf of users, offering steady, gradual gains with little effort and low risk.
Arif was skeptical, but trusted MTFE because it was a Canadian company.
“I thought that Canada should have strict regulations and that it should have good regulations around setting up a company and doing trading,” said Arif, who asked his full name not be used.
The information you need to know, sent directly to you: Download the CTV News App
By August 2023, Arif had invested the equivalent of about US$3,400. Most of that was money he borrowed from his parents.
“I assured them that there was no risk, so we can get them the money back,” said Arif. “And it didn’t work out.”
That month, MTFE’s website went down. Investors could no longer withdraw their money. And then, it was gone.
Bangladesh’s Criminal Investigation Department — which didn’t respond to repeated requests for comment — told local media as many as 500,000 people in the country may have lost money.
Bangladeshi police have estimated investors lost the equivalent of US$1.7 billion, according to the Dhaka Tribune. In Sri Lanka, the Sunday Times quoted said the equivalent of US$1 billion was stolen from investors there, citing the country's central bank. The bank declined to comment for this story, citing the ongoing investigation.
To sign up, users had to purchase and send cryptocurrency to one of various digital wallets used by MTFE.
A sleek app would then show users the state of their “investments,” including daily returns and losses. Initially, users could even withdraw money, which made them more inclined to trust it.
Many, like Arif, heard about the company through a friend. That was no coincidence. MTFE offered financial incentives to users who recruited more investors, something Arif now recognizes as a hallmark of a pyramid scheme.
Court records in Sri Lanka suggest MTFE also benefited from local partners who promoted the platform in exchange for a share of the profits.
In August 2023 -- shortly before the scheme collapsed -- Sri Lanka’s central bank began an investigation into local companies set up to promote MTFE.
Sri Lankan authorities arrested three individuals in 2024 on charges of money laundering related to their role in the alleged pyramid scheme. Proceedings are set to resume this September.
The bank – which declined to comment on the investigation – has also banned 10 other individuals it suspects of being involved with the scheme from leaving the country since August 2023. It has also obtained orders freezing the movement of funds from 29 cryptocurrency wallets, which the bank said contained the equivalent of about US$900,000.
In court filings, investigators claim the local promoter groups received between 60 and 70 per cent of investments made by MTFE users.
The rest, investigators said, was kicked up to the “parent company” in Canada in the form of a “service fee.”
Investigators did not know who was behind that “parent company,” or how local promoters contacted them. The records say there “is no information available about any organization running this computer software service or the individuals responsible for creating or hosting the service.”
But court records say the arrested suspects testified they would receive the equivalent of US$4,000 in cryptocurrency and a US$500 monthly allowance if they personally recruited 100 people onto the service.
Those groups eventually became very large. Investigators claimed one of them had 42 sub-branches throughout the island. One became large enough that it sponsored a local cricket team, the Jaffna Kings. Another promotional group even hosted a concert, the court documents said.
Investigators said MTFE software that investors like Arif had used did not seem to work and had been “inactive since the beginning of this inquiry.”
Many transactions with MTFE happened via Binance, a Canadian cryptocurrency exchange.
In a statement, Binance spokesperson Carolina Matos said the company “was made aware of the MTFE scam by one of our trusted law enforcement partners” in August 2023. She said Binance was “unable to provide details of the case due to ongoing investigations.”
Matos said MTFE was also active in Pakistan and Nigeria. She noted the company had curated a strong online presence and even successfully registered for the Apple mobile app store.
“This showcases how well-crafted schemes can appear legitimate on the surface while deceiving both seasoned and novice investors alike,” Matos said.
Nauriin Ahmed, a Dhaka-based lawyer specializing in technology, says Bangladeshi residents have been repeatedly targeted by such schemes.
The country’s restrictive securities trading regime means Bangladeshis have relatively few legitimate ways to invest.
'I ... thought I wouldn't fall for a scam like this'
While buying cryptocurrency in Bangladesh is easily done, it can also be considered a crime — one of the reasons why Arif asked not to be named for this story.
“These victims, at least within Bangladesh — they don’t have any sort of recourse,” Ahmed said.
Canadian officials knew about MTFE. The Ontario Securities Commission issued a brief statement in July 2023 warning that MTFE was not registered in the business of trading securities .
Andy McNair-West, a spokesman for the OSC, said they issued that statement after receiving calls about the company’s registration status. He did not answer questions about whether the commission contacted officials in Bangladesh or other affected countries, or if the OSC was investigating MTFE.
Canada’s federal corporate registry says MTFE is still active, though it has since been found non-compliant and is in the process of being dissolved.
Ahmed wishes the OSC’s warning had reached more investors.
“I think if OSC had reached out to the Bangladesh central bank to put out a circular saying this is not a legitimate organization … that would have helped,” Ahmed said.
If the scale of the alleged fraud was massive, so was its human impact.
Arif blamed himself for losing his family’s life savings. He worried his parents would kick him out of their house. At his darkest moments, he says he called suicide prevention hotlines for help.
Arif begged his parents to forgive him, and they did. But he still blames himself.
“I consider myself an educated individual and thought I wouldn’t fall for a scam like this,” Arif said.
The Canadian shell companies
Ahmed said the key to MTFE’s success was its Canadian credentials.
But on closer inspection, those credentials raise more questions about MTFE — and how it was able to operate in Canada in the first place.
MTFE’s corporate address was 500-7030 Woodbine Avenue in Markham, Ont., on the fifth floor of an office tower.
At one time, this one office unit in Markham was home to 97 different money services companies, including 95 registered foreign currency exchanges .
But there’s little evidence any of them ever did business there — or that they were even actual tenants.
A manager at the shared office space, whose name we’re keeping confidential, told CTV News, “it’s hard to keep track of all the companies using our address.”
The shared office space has about 650 clients registered at its Markham location. The manager told CTV News that “90% of (our clients) are good legitimate businesses, there’s 10% of that group that are not, and once we find out we shut them down, we stop accepting mail on their behalf and we close out their account.”
Joseph Iuso, the executive director of the Canadian Money Services Businesses Association(opens in a new tab), says such “clusters” of money services businesses are often a sign of fraud.
Money services businesses (MSBs) are a type of business that offers financial services like wire transfers, cryptocurrency exchange or foreign currency exchange. Most are legitimate, but they are considered high-risk for money laundering, which is why they must register with the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac(opens in a new tab), Canada’s financial intelligence unit .
But Iuso says Fintrac has neither the mandate nor the resources to audit the 3,000-odd registered MSBs in the country .
He says scammers have capitalized on that by incorporating companies and then registering them with Fintrac to make them seem more like legitimate businesses.
“A lot of them are Ponzi schemes related to crypto and foreign exchange and other high-yield investments or high-yield investment products,” Iuso said.
They congregate in the same locations, Iuso said, often picking addresses used by lots of other companies, like lawyers’ offices or corporate service providers.
Fintrac’s website states registration does not mean Fintrac endorses the business or can guarantee its compliance. But Iuso says that’s a nuance lost on most investors.
“Registration with Fintrac as an MSB can lead to a veneer of legitimacy,” said Denis Meunier, a former Fintrac deputy director. “And that can be abused.”
The unit at 500-7030 Woodbine Avenue is operated by IWG Plc., a British holding company that provides office services under the name of Regus . They own and operate 4,000 locations across the globe.
IWG Plc. would not provide an interview for this story. When presented with the IJF and CTV’s findings, public relations agent Linda North wrote an email saying they “take their regulatory responsibilities seriously.”
The manager at Regus’s Markham location shared that “fraudulent people know that business centres are easy prey because they can use the address as a legitimate business address but (the criminals) aren’t paying to use our address (for their companies) and we can’t keep track of the people who’re using it.”
Fintrac may have known something was amiss at the Woodbine address.
As of February 2024, it had revoked the registration of 86 of the 97 MSBs based there.
Fintrac would not say why it did that.
But a confidential 2022 Fintrac report to the Minister of Finance says the agency “detected an unusual trend” that year involving 95 MSBs registered to the same address, almost none of which responded to “repeated attempts” to contact them .
In the report, which the IJF and CTV obtained via access to information legislation, Fintrac asked the Ministry of Finance to give it new tools to revoke registrations from “unscrupulous operators” and to address “exploited weaknesses.”
In June 2023, the federal Ministry of Finance introduced a new requirement for MSB registrants to provide criminal record checks for their directors. A ministry spokesperson declined repeatedly to say why the government did that.
Fintrac would end up revoking registrations for most of those MSBS in January 2022 — but not MTFE, which kept its registration until September 2023, a month after the scheme had folded.
A cluster of MSBs
It’s not clear who the masterminds behind MTFE were.
One of the company’s registered directors, Hongbing Wang, listed an address in China. The second, Randy Mathieu Lane, had a listed address in Richmond, B.C.
The IJF and CTV tried to find and interview those people without success.
The paper trail led to another business on the other side of the country.
The IJF and CTV examined corporate filings for all 97 of MSBs incorporated at 500-7030 Woodbine Ave.
We found 75 of those companies had a director who used the address 150-10451 Shellbridge Way – the same address used by Lane.
The 150-10451 Shellbridge Way address was also listed by MTFE on its website, according to an archived webpage from the Wayback Machine. The address was changed sometime before August 2022.
That is the address of Raydwell Consulting, a Richmond “business service provider” whose website markets “virtual addresses” and dedicated phone lines for registered companies.
The company’s director, De Wang, wrote in an email to the IJF that his company had never worked for MTFE or any of the other companies whose directors used Raydwell’s address.
Listed phone numbers for those MSBs — which all used British Columbia area codes — did not respond to calls.
Iuso suspects some of the directors may not exist — or that they are using false identities.
“They’re all fake. Fake, fake, fake,” Iuso said.
Bad actors
Experts interviewed for this story say its findings raise serious questions about Canada’s regulation of MSBs.
Peter German, a former RCMP deputy commissioner and the author of two reports on money laundering in British Columbia, says the incident shows the limits of Fintrac’s mandate and authority.
“By creating this registration process, you do recreate a certain air of legitimacy to those who register that maybe they don’t deserve. And that can be misleading,” German said .
Some said it also speaks to a greater trend of criminals exploiting Canada’s reputation and corporate infrastructure without obvious consequences.
“I guarantee this group (MTFE) that you’ve discovered, they’re still operating” Iuso said.
Fintrac declined to answer specific questions about MTFE.
Finance Minister Chrystia Freeland originally declined to be interviewed for this story.
When asked about some of the investigation’s findings at an unrelated press event in Markham, she highlighted recent regulatory changes cracking down on activity like money laundering. But she acknowledged the status quo was not perfect.
“We do have more work to do here in Canada, both in terms of ensuring we have the tools we need to crack down on fraud and money laundering and also that enforcement agencies across the country are doing their jobs,” Freeland said.
But any changes come too late for victims like Arif, who is still getting his life back on track.
As of April, Arif said he had finally finished paying back his parents for the money he lost on MTFE. It didn’t come easily: he had to cut back on almost all his expenses, he said, and miss out on time he would normally spend with friends.
And he’s cautious about ever investing again.
“People are vulnerable when they’re trying to escape their poor life and get a better life for themselves and their family,” Arif said.
“Everyday, now, people are falling for a new scam.”
F my biggest holding bad day but I won $35 golfing today
Funny enough I only buy Kias and just bought 2 in the last 4 months
My youngest son's had two used Fords. Great cars. Eldest son just bought a 3-year-old Lexus. So far, so good.
FWIW - Ford is probably the only American auto maker I would buy from, IF I BOUGHT AMERICAN, which I dont - I buy Toyota. They have proven to be hassle free vehicles. I'm driving the 2007 FJ Cruiser I bought new in 2006 and have had nearly zero problems. I did change out the alternator once, but I think that's it. Same with my wifes 2018 Camry. Just great vehicles and great service. I did give Honda a shot once. NOPE. The resale value was abysmal. My FJ Cruiser that I paid $25k for in 2006 would probably sell for around $20k, partly because its only got a little over 100k miles on it (I'm a light driver).
Many micro-regional banks have been doing well. USMT - Korean bank in So Cal just released their 2nd quarter earnings the other day.
go here
Book value $5.94 and I think they're on track to do over .50 per share for the year. Should be trading closer to book.
No divies but last time (2022) they did do one they gave 1.1 shares per 1 which is a 10% divy so they are looking out for shareholders
[KRE and KWBR to track regionals]
I call it SCAMBELING.
....but there's lots of good little companies out there --- you just gotta find them.
DD Support Board and Fraud Research Forum
This forum is a place for ALL to share and build research and due diligence.
This is not a forum for recommending stocks to buy or sell. It is for information sharing only.
Please do not use this forum to promote stocks.
Feel free to build on the research already done by others or to present fresh new research.
Please start all informational posts with the ticker symbol of the stock.
Important links:
Another place to read some of nodummy's research:
http://promotionstocksecrets.com/
Great Forum for Litigation and Court Docket updates not posted on this board:
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SEC trading suspensions:
http://www.sec.gov/litigation/suspensions.shtml
SEC press releases:
http://www.sec.gov/news/press.shtml
SEC administration proceedings:
http://www.sec.gov/litigation/admin.shtml
SEC litigation releases:
http://www.sec.gov/litigation/litreleases.shtml
Most recent SEC flings:
http://www.sec.gov/cgi-bin/browse-edgar?company=&CIK=&type=&owner=exclude&count=40&action=getcurrent
Great Website for basic information about the laws surrounding penny stocks
http://www.securitieslawyer101.com
Stock Dilution Scam:
A share dilution scam happens when a company, typically traded in unregulated markets such as the OTC Bulletin Board and the Pink Sheets, repeatedly issues a massive amount of shares into the market for no reason, considerably devaluing share prices until they become almost worthless, causing huge losses to shareholders. Then, after share prices are at or near the minimum price a stock can trade and the share float has increased to an unsustainable level, those fraudulent companies tend to reverse split and continue repeating the same scheme.
Pump and Dump Schemes:
"Pump and dump" schemes, also known as "hype and dump manipulation," involve the touting of a company's stock (typically microcap companies) through false and misleading statements to the marketplace. After pumping the stock, fraudsters make huge profits by selling their cheap stock into the market.
Pump and dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have "inside" information about an impending development or to use an "infallible" combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is "pumped" up by the buying frenzy they create. Once these fraudsters "dump" their shares and stop hyping the stock, the price typically falls, and investors lose their money.
http://www.sec.gov/answers/pumpdump.htm
The key is understanding
The key is understanding that pink sheet stocks are not investments - 99% of them will lose value over the long run and never accomplish most of their forward looking pumping statements they put in press releases or on their websites. Never believe the hype - always be skeptical of everything you hear.
The people mostly making money with pink sheet stocks are promoters, front loading pumpers with big followings they can dump on, crooks, some of the flippers, and sometimes the very lucky.
Pumpers only tell you to buy stocks that they already own. Pumpers only tell you to hold stocks because they want to make sure you hold longer than them.
They make money by pumping the stock and getting other people to buy then dumping their shares on the followers.
If you really want to take the risk of trying to make money trading pink sheet companies then you have to understand how the game works and never ever hold long term - take profits when you can. Pump and Dumps dominate the IHUB forums.
Trading pink sheet stocks is a sick game full of lies and deceit where people take advantage of the inexperienced and naive stealing away their life savings for their own personal gains.
Very little respect or morals exist in stinky pinky land.
The Consequences of an SEC Suspension:
Complete list of SEC suspended stocks and SEC Admin. Law Judge registration revocations from January 1st, 2010 to May 9,2020:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=155531213
More information on Suspended Stocks
http://investorshub.advfn.com/SEC-Suspensions-&-Revocations-25334/
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