I believe in giving credit where credit is due and, no matter what you come to think about the kids involved in this fraud, you have to admit that this is pretty damned crafty for a couple of 16-year olds. The SEC is going after twin brothers in the UK for scamming American investors out of $1.2 million with claims of having a "stock picking robot" that identifies stocks set to appreciate by up to 400%. The brothers, now 21, were just 16 when they came up with the scam.
They say a fool and his money are soon parted, and this certainly seems to prove that. These guys had it all figured out. Not only did they sell a bogussystem to over 75,000 people (mostly Americans), the stocks that the system "recommended" were all companies that paid the brothers to promote their stocks. And here's the kicker: the SEC might not have a leg to stand on.
Jurisdictional concerns aside, I'm not sure these kids technically broke any securities laws. All they did was sell a newsletter for $47 a month and/or a computer program for $97 which was basically an RSS feed for the companies the brothers decided to pump at the moment. It's not like they were clearing trades or anything. If anything, this sounds more like the FTC's ballgame than the SEC's.
Maybe it's my defective personality, but I can't help but admire the simplicity of the scheme and the deftness with which it was carried out, especially in light of how young these guys are.
They had the hook: a computer algorithm named Marl, engineered byand now secretly available to you, Mr. Investor. They had the chutzpah: charging $47 for a newsletter and $97 for an RSS feed of stocks they picked out of thin air - and getting 75,000 suckers on board. And they had the brains: they realized early on that the subscription fees were chump change compared to what companies were willing to pay to have their stock pumped - and they raked in another $2 million in promotion fees.
These guys shouldn't be in court, they should be teaching a clinic. I hope theirhas half the brains they do and manages to get this thrown out. No matter what happens, at the very least this is hilarious. The only reason people fall for scams like this is that they're greedy, so they mostly get what they deserve.
Or am I wrong?