“State Securities Commission” Website Appears Designed to Dupe Investors
WASHINGTON (November 9, 2011) – The North American Securities Administrators Association (NASAA) announced today that it has demanded the operator of the “State Securities Commission” website cease operations after it was learned that the website misappropriated NASAA content and appeared to have been created for an unlawful purpose.
The website (www.statesec.org) appears similar to the “phantom regulator” sites NASAA warned about in a 2005 investor alert, said Jack Herstein, NASAA President and Assistant Director of the Nebraska Department of Banking & Finance Bureau of Securities. Herstein said the website, which appears to have been launched on October 24, 2011, has joined a long list of similar copycat sites designed to dupe investors.
“Several fake regulator websites have been brought to the attention of state and federal securities regulators in recent years,” Herstein said. “Many of these sites purport of offer relief to investors. In reality, they are fronts for con artists posing as regulators.”
Herstein said no legitimate state or provincial securities regulatory agency is affiliated with the State Securities Commission website. “We are concerned that con artists are attempting to cash in on our reputation for effective investor protection to lure others into an illicit scheme,” he said.
Herstein said the questionable website contains elements from the NASAA website and other securities-related sites, including that of the Securities Investor Protection Corporation (SIPC). For example, the site includes slightly modified versions of recent NASAA news releases and investor alerts and misleadingly states that the membership of the “State Securities Commission” consists of “the securities administrators in the 50 states, theDistrict of Columbia, Puerto Rico, the U.S. Virgin Islands,CanadaandMexico.” Elsewhere, the site claims that “The State Securities Commission was chartered by Congress to combat fraud.”
“This information is patently false,” Herstein said. “Cons will go to great lengths to make themselves appear legitimate.”
The website purports to make available a claim form for investors with broker-dealers in liquidation under the Securities Investor Protection Act. The site asks investors submitting a claim to include a copy of their most recent brokerage account statement, along with copies of confirmation slips for securities transactions, correspondence and other documentation. Some investors also are asked to include a check with their completed forms.
“Requests to submit personal account information and money to a ‘regulator’ are red flags of investment fraud,” Herstein said.
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Bob Webster, Director of Communications