The following are summaries of administrative actions the Texas State Securities Board took from Oct. 1 through Dec. 31, 2018:
GoForex Group AKA Go Forex Group, Mary A. Scott, and Sharon Henderson: Emergency Cease and Desist Order
Texas Securities Commissioner Travis J. Iles on Oct. 10 entered an Emergency Cease and Desist Order against GoForex Group, a South Carolina firm that is promising investors of limited financial means that it can produce huge returns from investments in foreign currency trading, real estate, and oil and gas. The firm also claims it is a “legally registered” private investment firm.
GoForex is targeting Texas residents with advertisements claiming investors can earn a return of 900% on their money in 21 days. GoForex is telling investors it has a team of hundreds of foreign currency traders and other professionals with expertise in real estate and oil and gas investing.
According to the order, GoForex says its “minimum investment plan” – available for as little as $500 – was created for “people with small financial strength, students and first time investors.” GoForex claims this plan has “helped thousands across the globe [to] overcome frequent financial breaks.”
GoForex lists an address in Detroit, but it is not incorporated in Michigan, according to the order. The company is located in Orangeburg, S.C. It is not registered to sell investments in Texas, nor are the two individuals associated with GoForex named in the order. The company has published a business registration certificate on its website, but it is a fraudulent document that was digitally modified from a certificate issued by the International Business Companies Registry of Belize.
GoForex is also publishing false testimonials on its website. The company claims one photograph is of a client of the firm, but the person depicted is an NPR radio host in Connecticut who has never been a client of the firm or associated with it.
GoForex is failing to disclose to investors the background and expertise of the financial professionals who will trade foreign currencies and invest in real estate and oil and gas. It is also not disclosing the risks involved in the types of investments it is offering to Texans.
Brazos Securities Inc.: Fine, Order of Reimbursement
Brazos Securities Inc. of Dallas paid a $20,000 fine to the State of Texas and paid $32,569 to a client who was charged excessive fees after being moved to an investment advisory account at the firm.
The Disciplinary Order, which Texas Securities Commissioner Travis J. Iles entered Nov. 5, sanctioned Brazos Securities for not having supervisory procedures in place governing fees for clients who are moved from brokerage to investment advisory accounts.
Brazos Securities receives commissions based on the transactions it makes in buying and selling stocks, mutual funds, and other securities for clients in brokerage accounts. Clients in the firm’s investment advisory accounts pay fees based on the value of assets in the account.
In 2014, an investment adviser representative with Brazos Securities began recommending his clients convert their brokerage accounts to investment advisory accounts.
The firm charged a reduced fee of 0.5% of assets under management to some clients who moved into investment advisory accounts because the clients would continue to pay other costs associated with managing their investments.
One client, however, paid fees ranging from 1% to 2% of assets under management in addition to other investment costs. From 2014 to 2017, the client paid average annual fees of $16,774 per year, even though the firm made no changes in the trading strategy or investments recommended to the client.
From 2010 to 2013, when the client was in a brokerage account at the firm, the client paid annual average fees of $8,632.
The repayment to the client reflects the difference in fees over those periods.
Trade-PMR Inc.: Fine, Reprimand
Texas Securities Commissioner Travis J. Iles entered a Disciplinary Order on Nov. 5 that levied a $25,000 fine on Trade-PMR Inc., a provider of brokerage and technology services, for failing to know that two investment advisers using its services were not registered to render investment advice in Texas.
Trade-PMR, based in Gainesville, Fl., provides trading platforms and other technology services to persons and firms acting as independent investment advisers. It has been a registered dealer in Texas since 1999.
The firm’s supervisory procedures include confirming that the investment advisers using its services are registered. In the period of July 2014 to January 2017, however, two of its investment advisers in Texas did not pay their registration renewal fees.
Despite becoming unregistered, the advisers continued to place trades through Trade-PMR.
The order sanctions Trade-PMR for failing to enforce its written supervisory procedures.
In addition to the fine paid to State of Texas, Trade-PMR will also contribute $5,000 to the Investor Protection Trust, a nonprofit organization that supports investor education efforts in Texas and other states.
EXY Crypto AKA EXECRYPTO, Morgan Nolan, Rafael Logan, and Melissa Spring: Emergency Cease and Desist Order
EXY Crypto, based in Quebec, Canada, and the firm's San Antonio-based promotions manager, Morgan Nolan, were cited in a Nov. 6 Emergency Cease and Desist Order for violations of the Texas Securities Act for offering cryptocurrency-related investments through social networks including LinkedIn, an online professional network with more than 562 million users worldwide.
Users, including Texas residents, are receiving advertisements for EXY Crypto in their LinkedIn feeds. The strategy director for EXY Crypto, Melissa Spring, claims to live in Tyler and is also offering the investments through LinkedIn.
The advertisements claim investors will earn a weekly return of at least 10%, which is guaranteed “100% safe and secure.” They also falsely claim EXY Crypto is a licensed and registered company.
On its website EXY Crypto is promoting four levels of investments in cryptocurrency mining. For example, the company claims that a $1,000 investment will produce a return of 15% paid weekly.
The company is also recruiting investors to act as sales agents, promising them they can earn commissions based on the amount of new investment they bring in.
EXY and Nolan are falsely claiming that EXY is licensed to sell investments in cryptocurrency mining.
Nolan claims to be based in the United Kingdom, but he is from San Antonio and is asking potential investors to contact him by calling a number with an area code assigned to the San Antonio region.
EXY Crypto is intentionally not disclosing material facts about the investment, including the identity of the principals of the company, its place of business, and the costs and fees investors will incur in purchasing an investment in the mining program. Nor is the company disclosing the risks in the mining of cryptocurrencies.
Nolan and EXY Crypto are offering investments without being registered to sell securities in Texas, a violation of the Texas Securities Act, and they are recruiting investors who are not registered as dealers or agents to sell investments in the mining program.
AWS Mining Pty Ltd., Automated Web Services Mining AKA AWS Mining, Daniel Beduschi, Alexandre Campos, Jessica Nunes Sivirino, MyCoinDeal, AWS Elite, Josiah Kostek, West Texas Oilfield Cloud Miners Club, and Kenneth Luster: Emergency Cease and Desist Order
Texas Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order on Nov. 6 against AWS Mining PTY, the Australian business name holder for AWS Mining and MyCoinDeal. The latter provides digital wallet services for cryptocurrency investments issued by AWS Mining.
AWS Elite is one part of the multilevel marketing organization for AWS Mining. Its sales agents include the Midland-based West Texas Oilfield Cloud Miners Club (WTO Miners) and its principal, Kenneth Luster of Midland.
The companies and the sales agents named in the AWS Mining order are issuing investments in cryptocurrency mining, which they are calling crypto mining power contracts. AWS Mining claims it is mining cryptocurrency in computing facilities in China, Russia, and Paraguay.
According to the order, AWS is claiming the contracts are “guaranteed to 200% return on purchase price."The unlicensed sales agents are also touting this guarantee by representing the investments pay a “200% passive return on every investment.”
Although investors are being told they will receive a 200% return on the purchase of the contacts, AWS Mining is disclaiming the guarantee, instead passing the risks associated with cryptocurrency mining to investors. These risks include the volatility of cryptocurrencies, system or technical failures, and changes in the cost of electricity used to power and cool hardware.
According to the order, AWS Mining is using a multilevel marketing network of sales agents to sell the mining power contracts and are paying as many as six different types of bonuses and commissions to these sales agents.
Luster and WTO Cloud Miners are offering crypto mining power contracts in Texas and inviting potential investors to webinars hosted by AWS Elite.
The crypto mining power contracts are not registered to be sold in Texas and none of the companies, principals, and sales agents are registered to sell securities in Texas.
My Crypto Mine and Mark Steven Royer: Emergency Cease and Desist Order
Texas Securities Commissioner Travis J. Iles entered an Emergency Cease and Desist Order on Nov. 27 to stop an investment offering by a cryptocurrency promoter who previously sold a digital currency that lost 99% of its value.
The order alleges that Mark Steven Royer of Del Mar, Calif., is fraudulently offering investments in a cryptocurrency trading and mining program operated by My Crypto Mine. Royer, a principal of the company, is targeting investors in Texas and elsewhere using social media and standalone websites.
According to the order, Royer is not disclosing key information about the risks of the cryptocurrency trading and mining that My Crypto Mine is supposedly undertaking. Nor is he informing investors about his experience at BitQyck Inc., a company that sold a digital currency called bitqy. Royer was an alleged affiliate of BitQyck, a Dallas company controlled by Bruce Bise and Samuel J. Mendez. In 1997, Bise was sentenced to seven years in state prison in Arizona after his conviction on check forgery charges. Mendez was disbarred as a California attorney in 1996 after misappropriating client funds.
Royer was allegedly selling bitqy as early as May 2017, when its price was $0.02, according to the order. He told potential investors the price of bitqy would rise to $3.00, but as of Nov. 11, 2018, bitqy had lost more than 99% of its value.
Instead, Royer is touting his 30-plus years in the information technology sector and his 10 years of involvement in cryptocurrencies. Royer is promising investors that they can earn guaranteed, no-risk returns of between 10% and 20% per week.
In an effort to boost investor confidence, My Crypto Mine is claiming its trading is audited twice yearly. Royer, however, is allegedly providing investors with no information about My Crypto Mine’s trading strategy or the background of its personnel.
Royer’s marketing targets a wide audience. He claims the profits from My Crypto Mine investments have helped small investors save for retirement; allowed parents and grandparents to build up six-figure college funds; and wiped out credit card and tax debts.
Royer also allegedly claims My Crypto Mine has been selected by a “major national Church” to be its “recommended Crypto/Passive Investment” for its 6 million members.
According to the order, Royer is recruiting sales agents to sell My Crypto Mine investments without verifying they are registered to sell securities in Texas, as state law requires.
Robin Curt Holcomb: Fine, Reprimand
Holcomb, an investment adviser representative with Wedbush Securities Inc. in Dallas, was reprimanded and paid a $3,000 fine for failing to update his disclosure information in a timely manner.
The Disciplinary Order, entered Nov. 27, found that Holcomb violated State Securities Board Rules by not disclosing a civil judgment against him within 30 days.
On Jan. 23, 2015, Holcomb entered into a payment agreement in connection with a civil judgment against him. Ameriprise Financial Services Inc., Holcomb's employer at the time, asked him for information about the judgment in April 2015.
Holcomb did not provide Ameriprise with information about the judgment or update his securities filings until November 2015, 10 months after agreeing to pay the judgment.
The order granted Holcomb's registration as an investment adviser representative and agent of Wedbush Securities.