SEC Issues Investor Alert on Trading Seminar Scams

SEC v. Investools Inc., Michael J. Drew, and Eben D. Miller

The SEC filed a complaint against the defendants alleging that they made false and misleading statements to induce investors into purchasing their trading products. Investools sold instruction, software and personal coaching to investors who wanted to learn how trade options and other securities. The complaint alleged that two employees of Investools misleadingly portrayed themselves as expert investors who made their living trading securities in order to induce investors into believing they would also become successful traders if they purchased Investools trading products. The SEC settled this matter.

The SEC alert also lists signs of trading seminar scams, which include:

• Claims that trading strategies are “easy” or “simple.” Trading strategies are not “simple” or “easy.” Securities transactions occur in complex financial markets. Investors should be skeptical of anyone making those kind of claims.
• Be mindful of “guaranteed” returns. Trading any type of securities carries some degree of risk, and the level of risk typically correlates with the return an investor can expect to receive. Low risk generally means low yields, and high yields typically involve higher risk. Fraud promoters often spend a lot of time trying to convince investors that extremely high returns are “guaranteed” or “can’t miss.” Don’t believe it. High returns represent potential rewards for investors who are willing and financially able to take big risks.
• High-pressure sales tactics. Fraud promoters often use high-pressure sales tactics to get investors to buy their trading products and classes without thinking it through. They might claim there are only a few spots left or that getting in immediately will allow investors to see the greatest returns. Any reputable promoter of trading products or classes will let investors take their time to do research and will not pressure them for an immediate decision.
• Sounds too good to be true. Generally, if a strategy for trading securities sounds too good to be true, it probably is. No strategy for trading securities is fool-proof.

The SEC also recommends that investors do their homework before attending a seminar. 

Investors should research the people or company promoting the investment seminar as well as the trading products or classes being sold at the seminar to see if they have any history of complaints, fraud, or criminal activity. 

Investors can check-out speakers at seminars through the following resources:

• For all speakers, start by checking an Internet search engine.
• For speakers that are broker-dealers, use FINRA’s BrokerCheck website.
• For speakers that are an investment adviser, use the SEC’s Investment Adviser Public Disclosure website.
• For all speakers, also contact your state securities regulator.  Investors can find the contact information for their state securities regulator at the North American Securities Administrators Association’s website.