The SEC’s Office of Investor Education and Advocacy cautions investors to research the credentials of financial professionals before trusting that person with investment money. This precautionary investigation will serve as a safeguard against people who may lie about their backgrounds in an effort to gain more professional trust from investors with their finances.
This public warning reads, “Do not trust someone with your investment money just because he or she claim to have impressive credentials or experience, or manages to create a ‘buzz of success.’” It was issued after the SEC brought several recent cases involving people falsifying their backgrounds to be viewed as more credible.
Julie Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit, stated, “Advisers looking to raise funds cannot lie about their backgrounds to lull investors into a false sense of security about their purported expertise or the profitability of a potential investment.”
Financial professional Michael G. Thomas of Pennsylvania advertised that he was named a “Top 25 Rising Business Star” by Fortune Magazine for a private fund named Michael G. Investments LLC. However, Fortune Magazine awards no such honor. Also, Thomas embellished his own past experiences with investors, lied that certain financial professionals would manage the fund with him, and exaggerated the projected profit the fund will gain.
Thomas agreed to pay a $25,000 penalty and is barred from the issuance, offer, or sale of certain securities for a five year period to settle the SEC’s charges against him. He also is banned from associating with any financial professional for at least five years.
In a separate investigation headed by the SEC, Delaware-based broker Thomas Schoenberger lied to investor prospects while marketing promissory notes issued by his unregistered investment firm, LandColt Capital LP. Schoenberger wrongly claimed he held a college degree from the University of Maryland. He also exaggerated his appearances on televised news programs. Further, Schoenberger promised investors that a private fund would raise enough money for LandColt to repay the promissory notes Schoenbergers sold to investors. However, Schoenberger never started the private fund and never had any intention of doing so. Instead of paying investors the returns promised, Schoenberger pocketed the funds.
Schoenberger will pay $65,000, plus interest, in settlement charges. He also is barred from associating with any financial professional and from serving as an officer or director of a public company.
Any person can discover if a financial professional is properly licensed by conducting a background check hosted by the SEC’s Investor.gov website in the “Ask and check” section. Investors can also use www.brokercheck.finra.org.
If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.