NASAA Warns Investors to Beware of Phantom Regulators

Con Artists Posing as U.S. Regulators Go Global to Lure Investors

WASHINGTON, D.C. (July 28, 2005) – Want to check out a hot stock tip before you invest? Make sure you aren’t getting bad advice from con artists posing as regulators, warns Franklin L. Widmann, Chief of the New Jersey Securities Bureau, and President of the North American Securities Administrators Association (NASAA).

Widmann warned that several fake “regulators” have been brought to the attention of state securities regulators. These “regulators” claim to be based in the United States and often target overseas investors.

“The U.S. securities markets are known around the world for being among the safest and most fair, due in no small part to the rigorous and efficient regulatory systems in place here. Con artists are trying to cash in on our good name abroad to lure unsuspecting investors into risky penny stocks and advance fee schemes,” Widmann said.

Widmann identified a number of phantom “regulators,” including: the Regulatory Compliance Commission, the International Regulatory Commission, the International Compliance Commission, the International Compliance Center, the International Shareholder Protection Division, the Global Securities Information Center, the Central Registry Regulators, the International Securities Verification Center, the Offshore Investors Protection Association, and the International Exchange Regulatory Commission. Each of these entities had websites and listed addresses and telephone numbers in the United States and none have any relation to real regulatory agencies or organizations.

“Some of these websites may look very legitimate but all successful scams do, at first. These websites offer nothing more than fancy window-dressing to lure investors into buying worthless securities from unlicensed stockbrokers,” Widmann said, adding that these brokers and offers are often “verified” by the phony regulators.

Widmann said investors lose billions of dollars a year to securities fraud overall and he warned, “There are probably many more fake regulators with websites and shell offices like these. The Internet is a big place, making it difficult to police, and sometimes dangerous for investors.”

Top 5 Warnings Signs of a Phantom Regulator

To help investors determine if they are dealing with a bogus regulator, NASAA issued the following warning signs:

  1. You cannot find references to them on any other regulatory websites. If you can’t find information about the “regulator” on the site of the International Organization of Securities Commissions, www.iosco.org, they probably are not a legitimate regulator.
  2. They endorse or approve any investment opportunity, stock, or company. Legitimate regulators are not in the business of promoting any deal, only enforcing securities laws and ensuring fair dealing.
  3.  They say that paying a fee to “release restricted shares” is anything other than an attempt to steal your savings. This is a common ploy, and a recent twist on age-old advance fee schemes.
  4. Little or no information about the “regulator” appears in Internet search engines. Any legitimate regulator should generate hundreds of entries in any Internet search engine.
  5. If you talk to other regulators, and they say they have “never heard of them,” you are most likely dealing with a fake regulator.

Contact information for state and provincial regulators in the United States, Canada and Mexico can be found at www.nasaa.org.

NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces and territories of Canada, and Mexico.

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For More Information:
Bob Webster
Director of Communications
202-737-0900

2005 Headlines, Investor Alerts & Tips, Newsroom