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Secretary of State

Securities Division > News Archive  > 2005 Press Releases > For Immediate Release: July 28, 2005 Rokita Warns Investors to Beware of Phony Regulators

Contact: AJ Freeney-Ruiz
317-233-8655
Media@sos.in.gov

Indianapolis, IN - Do you want to check out a hot stock tip before you invest? Make sure you are not getting bad advice from con artists posing as regulators, warns Indiana Secretary of State Todd Rokita.

Rokita warned that several fake "regulators" have been brought to the attention of his office's Securities Division by the North American Securities Administrators Association (NASAA). One such "regulator," the fictitious International Center for Fraud Control (ICFC), was identified through at tip from a licensed broker to Rokita's office earlier this summer after the broker's client was contacted and told to send money in order to recover money lost in an investment.

Similar to other fake regulators who claim to be based in the United States and target overseas investors, the ICFC claimed to be based in Indianapolis. Upon learning of the ICFC website through the broker's complaint, the Secretary of State's office investigated and found that much of the site's content was plagiarized from a legitimate state regulatory agency and the office reported their findings to the SEC and the Indiana Attorney General's Office.

"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," Rokita said.

Rokita identified a number of imitation "regulators," including the following: 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 and none have any relation to real regulatory agencies or organizations.

"Some of these websites may look legitimate, but all successful scams look legitimate at first. These websites offer nothing more than fancy window-dressing to lure investors into buying worthless securities from unlicensed stockbrokers," Rokita said, adding that these brokers and their offers are often "verified" by the phony regulators.

Rokita said 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 whether they are dealing with a bogus regulator, the Secretary of State's office issued the following warning signs:

Top 5 Signs That You Are Dealing with A Fake Regulator

  1. You cannot find references to them on any other regulatory websites. If you cannot find information about the "regulator" on the site of the International Organization of Securities Commissions, www.iosco.org, it is probably not a legitimate regulator.
  2. They endorse or approve any investment opportunity, stock, or company. Legitimate regulators are not in the business of promoting any deal; they enforce securities laws and ensure fair dealing.
  3. They say 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 the regulator in question, you are most likely dealing with a fake regulator.

Rokita also urged investors to contact the Secretary of State's office with any questions about an investment product, broker, or adviser before making an investment. "One phone call can save a lot of money and heartache," he said.

Rokita reminds Hoosiers to check out any opportunity before investing and to report any suspected fake regulators. All corporations should be registered with the Secretary of State's office, as should investments and their sellers. The Secretary of State's office is also familiar with other regulators. Information can be verified by visiting www.sos.IN.gov, or by calling 1-800-223-8791. Examples of fake regulator websites can be found by clicking on the Securities Division's Investor Alert on the Secretary of State's website as well.

Contact information for state, territorial, and provincial regulators in the United States, Canada and Mexico can be found on the website of the NASAA at www.nasaa.org. NASAA is the oldest international organization devoted to investor protection. Its membership consists of the securities administrators in the fifty states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, the provinces and territories of Canada, and Mexico.

Fake Regulatory Sites*