Con artists are setting up Web sites for fake U.S. regulatory agencies to lure stock investors, many from overseas, into fraudulent transactions, officials from New Jersey to Montana warned on Thursday.
These "phantom regulators" -- with names like the International Compliance Commission and the Securities Protection Agency -- have been brought to the attention of actual regulators, the officials said.
"The U.S. securities markets are known around the world for being among the safest ... Con artists are trying to cash in on our good name abroad to lure unsuspecting investors into risky penny stocks and advance fee schemes," said New Jersey Securities Bureau Chief Franklin Widmann.
For instance, investors in Britain, Australia and New Zealand were targeted by a company called Royal Acquisitions Inc., which offered to buy shares of worthless stock, but asked for an upfront fee, officials said.
To make their pitch more convincing, Royal Acquisitions referred investors to a Web site for the "International Securities Regulatory Commission," said regulators in Montana, where the company and the commission were purportedly based.
There is no Royal Acquisitions or International Securities Regulatory Commission doing business in Montana, the Montana Securities Department said.
"We continue to get e-mails regularly from investors around the world asking about the legitimacy of Royal Acquisitions and the International Securities Regulatory Commission," said Karen Powell, deputy Montana securities commissioner.
This month the Missouri securities commissioner issued an order against the "Securities Compliance Department," which claims to be a regulator based in Kansas City.
Missouri officials said the case involved an Australian woman who was bilked out of $121,000 by a group called Century Group Mergers and Acquisitions. The woman said a man telephoned her claiming to be from the Securities Compliance Department and asked her to send more money.
In Massachusetts, state regulators said they have filed a complaint against RJL International Ltd., after receiving numerous complaints from overseas investors.
RJL agents were contacting investors and offering to buy their shares for up to 200 times the market price, but asking for an advance fee, state officials said.
"At least one investor submitted $19,000 to RJL, after which all communications with the firm ceased," said the Massachusetts Securities Division in a statement.
Rather than using a Web site, RJL encouraged reluctant investors to telephone the "International Public Shareholder Protection Service," an entity that does not exist, officials said.
Copyright 2005 Reuters Limited.
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