Posted by: David Fischer On: May 20th, 2013 | Number of Comments: Comments Off
This post was written by our own Justin Victor.
Last month the SEC announced that it had filed a civil action against Sean Morton, an individual who engaged in a multi-million dollar investment scheme premised on Mr. Morton’s self-proclaimed psychic abilities. Mr. Morton solicited potential investors in one of his several investment companies claiming that he would be able to use his psychic powers to provide investment guidance to his investing team, touting fictitious success in predicting previous rises and falls in the stock market. It is believed that all together Mr. Morton was able to fraudulently raise more than $6 million from over 100 investors. The Commission’s complaint charges each of the Defendants with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
While individuals claiming psychic powers may not be the most prevalent form of fraud, Mr. Morton is a great example of how every day vulnerable investors are targeted by individuals perpetuating and profiting from Ponzi schemes, false solicitations, and other illegal investment plans which contravene federal securities laws.
If an individual tipped the SEC off to Mr. Morton’s scheme, that individual will be eligible to recover a portion of the government’s recovery under the whistleblower provisions of the Dodd-Frank Consumer Wall Street Reform and Consumer Protection Act. You don’t have to be psychic to understand that individuals will always try and take advantage potential investors through a variety of schemes that violate others securities laws. Now however, well-educated consumers who properly report this fraud may be rewarded for seeing through and scammers smoke and mirrors.