The Securities and Exchange Commission today charged a group of internet marketers who allegedly created and disseminated elaborate rags-to-riches videos to trick retirees and other retail investors into opening brokerage accounts and trading high-risk securities known as binary options.
According to the SEC’s complaints, investors were conned out of tens of millions of dollars through these marketing campaigns, which promised that investors would make large amounts of money by opening binary options accounts and using free or secret software systems to trade in them. The SEC alleges that the marketers were paid for each new brokerage account that investors opened and funded. According to the complaints, the marketers’ internet video advertisements, which were disseminated through spam emails, used actors to portray ordinary people who became millionaires by trading binary options. The videos staged fake demonstrations of supposed software users watching their account balances grow in real time. The SEC alleges that the software was simply a ruse to persuade investors to open accounts with the brokers.
To help educate investors about the risks of internet marketing scams, the SEC’s Retail Strategy Task Force and Office of Investor Education and Advocacy created the first in a series of videos warning investors of the risks of providing personal information in response to online investment pitches, and have issued an Investor Alert about the use of affiliate marketing to generate interest in securities offerings.
“As alleged in our complaints, thousands of retail investors were swindled out of tens of millions of dollars by watching elaborately produced rags-to-riches stories that falsely promised wealth at the push of a button,” said Melissa Hodgman, Associate Director of the SEC’s Enforcement Division. “Those who use phony tactics to dupe investors out of their savings will be held accountable for false and misleading statements on the internet.”
“Before you provide any of your valuable personal information to anyone, make sure you do your research and know exactly who it’s going to,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. “Be aware before you share, and protect yourself from professional fraudsters who may target you and your money for life.”
The SEC’s complaints charged 10 individuals and two companies involved in the fraudulent marketing campaigns. The SEC’s investigation is continuing.
The SEC’s complaints seek penalties, disgorgement of ill-gotten gains, and permanent injunctions against Timothy J. Atkinson, Ronald “Ronnie” Montano, Jay Passerino, Michael Wright, and All In Publishing LLC. Justin Blake Barrett, William E. Berry and his company Berry Mediaworks, Grayson Brookshire, Antonio Giacca, Shmuel Pollen, and Travis Stephenson have agreed to settle the SEC’s charges. Without admitting or denying the charges, they agreed to pay a combined total of $4.1 million in disgorgement and prejudgment interest. Pollen has agreed to pay a $42,500 penalty. The Commission did not assess a penalty on the other settling parties as a result of their cooperation.
The SEC’s investigation is being conducted by Jason Anthony, Michael Fuchs, and Deborah Maisel, and supervised by Jennifer Leete. The SEC’s litigation against Atkinson, Passerino, Montano, Wright, and All In Publishing will be led by Kenneth Donnelly. The SEC appreciates the assistance of the Commodity Futures Trading Commission, which filed parallel actions today.