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The Securities and Exchange Commission is starting off 2012 hoping to shake the past year (years!) of embarrassment and coulda, shoulda wouldas. Last week, the SEC charged Anthony Fields and his affiliates, Anthony Fields & Associates and Platinum Securities Brokers, with selling $500 billion of fraudulent securities through LinkedIn and other social media websites. The interesting part about this announcement is not that the SEC is kissing its proverbial biceps and showing off its 2.0 know how (SEC employees presumably all discovered Facebook and LinkedIn over the holidays) but that the SEC is finally being shockingly proactive: no one had invested in Fields’ online scam. That’s a major accomplishment for both investors and the SEC.
Maybe someone or everyone is listening. Maybe people did their homework. Fields relied on social networking sites to spread his scam yet did not realize that inherent in these websites is the ability for investors to talk to each other. Maybe, just maybe, through a little public record digging, an investor saw that Anthony Fields has filed for bankruptcy protection twice (in 2002 and 2003) and has had numerous state and federal tax liens filed against him over the years and in 1995 was charged with failure to pay income taxes (a Class A felony). Maybe that investor talked to another investor who realized this wasn’t the best CV for a public accountant (which Fields was) and if someone had this many financial problems then maybe their motive for selling securities was jaded.
And, perhaps, once all of the investors pooled their information, they realized that Fields cannot be the omniscient Wizard of Oz: both a CEO of his company and its Chief Compliance Officer, as he states on his firm’s Investment Adviser Registration on file with the SEC. This is the ultimate meddling of financial church and state: you cannot be both head of the firm and head of the firm’s compliance. Pick one. Also, as the SEC claimed in its announcement last week, Fields represented himself as a broker dealer yet he was not registered as such with FINRA. Investors heeded all of these warning signs and did not indulge Fields’ nonsense on social networking sites. It is refreshing to see the SEC get out in front of this one (who knew we would ever say that without a smirk?).
The charges against Fields show that investment fraud has penetrated the social media community and investors should take heed. This is not unlike John Mattera who sold fake shares in Facebook and Groupon (read our post about him here). As experts in the risk prevention business, we believe there will unfortunately be more social networking investment scams down the road so keep your awareness sharpened. Hopefully, investors can take comfort in the SEC’s actions and we can chalk up the previous years to Junior Varsity mistakes. We would like to think this is a sign that investors and regulators have decided to make 2012 the year they go Varsity.
