|For Immediate Release
|July 28, 2005
Department of Financial Institutions Warns Investors to
Beware of Phony Regulators
Foreign investors getting a bad deal, in any language
(Madison) Want to check out a hot stock tip before you invest? Make sure
you aren’t getting bad advice from con artists posing as regulators,
says Patricia Struck, administrator of the Wisconsin Department of Financial
Institutions’ Division of Securities.
Struck warned that several fake “regulators” have been brought
to the attention of Wisconsin securities regulators. These “regulators”
claim to be based in the United States and often target overseas investors.
“Our securities markets are known around the world for being among
the safest and most fair, due in no small part to the rigorous and efficient
regulatory systems in place here. Con artists are trying to cash in on
our good name abroad to lure unsuspecting investors into risky penny stocks
and advance fee schemes,” Struck said.
Struck identified a number of imitation “regulators,” including:
the Regulatory Compliance Commission, the International Regulatory Commission,
the International Compliance Commission, the International Shareholder
Protection Division, and the International Exchange Regulatory Commission.
Each of these entities had websites and listed addresses and telephone
numbers in the United States, but none have any relation to real regulatory
agencies or organizations.
“Some of these websites may look very legitimate, but all successful
scams do, at first. These websites offer nothing more than fancy window-dressing
to lure investors into buying worthless securities from unlicensed stockbrokers,”
Struck said, adding that these brokers and their offers are often “verified”
by the phony regulators.
Wisconsin's DFI has been investigating complaints about the "International
Securities Division" that have come from potential victims in Great
Britain, and our staff have found that the address given is that of an
abandoned church, and the phone number, although it has a local prefix,
is not necessarily located in Wisconsin. A number of additional inquiries
have come from Denmark, Finland, and Scotland. "To our knowledge
there have been no local victims," said Struck.
Administrator Struck said that investors lose billions of dollars a year
to securities fraud and warned, “There are probably many more fake
regulators with websites and shell offices like these. The Internet is
a big place, making it difficult to police and sometimes dangerous for
investors.” To help investors determine if they are dealing with
a bogus regulator, Wisconsin's Department of Financial Institutions has
issued the following warning signs:
Top 5 Signs That You Are Dealing with Fake Regulators:
1. You cannot find references to them on any other regulatory
websites. If you can’t find information about the “regulator”
on the site of the International Organization of Securities Commissions,
probably are not a legitimate regulator.
2. They endorse or approve an investment opportunity, stock,
or company. Legitimate regulators are not in the business of
promoting any deal; they only enforce securities laws and ensure fair
3. They say that paying a fee to “release restricted shares”
is anything other than an attempt to steal your savings. This
is a common ploy, and a recent twist on age-old advance fee schemes.
4. Little or no information about the “regulator”
appears in Internet search engines. Any legitimate regulator
should generate hundreds of entries in any Internet search engine.
5. If you talk to other regulators, and they say they have “never
heard of them,” you are most likely dealing with a fake
The Department of Financial Institutions regulates state-chartered banks,
savings and loans associations, and savings banks, as well as various
operations of the securities industry. The DFI also oversees the Uniform
Commercial Code filing system and the Wisconsin corporate registry system
and also administers the Wisconsin Consumer Act. For more information
on the DFI and state securities regulators, please visit www.wdfi.org.
Contact information for state, territorial, and provincial regulators
in the United States, Canada and Mexico can be found on the website of
the North American Securities Administrators Association at www.nasaa.org.
NASAA is the oldest international organization devoted to investor protection.
Its membership consists of the securities administrators in the 50 states,
the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces
and territories of Canada, and Mexico.