Securities Commissioner Travis J. Iles is warning the public about sham investment firms using deceptive and misleading names to recruit new victims. Their names may be the same as or similar to the names of well-known, licensed or established firms. They adopt these names to confuse investors – often pretending to be a legitimate business or falsely showing some type of affiliation with a familiar company.
The warning comes after Commissioner Iles entered an emergency cease and desist order against Hyperion Trust LLC, an issuer acting under various names that include Hyperion Mutual Trust, Hyperion Assets Limited and Hyperion Assets Management. The order alleges Hyperion Trust is engaging in a fraudulent online scheme to defraud Texans by selling investments tied to stock, cryptocurrencies and forex. In furtherance of the scheme, Hyperion Trust is accused of falsely claiming association with Hyperion Capital Advisors LP - a federally-registered investment adviser with a similar name.
According to the order, Hyperion Trust is even claiming to manage a hedge fund with the registered firm. These assertions are simply false, according to the order – Hyperion Trust is not affiliated with the registered firm and does not manage a hedge fund with the registered firm.
“While it is the securities issuer’s legal responsibility to provide all information necessary to allow an investor the ability to make informed investment decisions, investors need to conduct thorough due diligence,” said Commissioner Iles. “Bad actors are using every trick in the book to solicit new victims. Investors need to pay careful attention to all details and meticulously research firms before purchasing an online investment. Trust and verify.”
Some cases are even more extreme. For example, Commissioner Iles previously entered an emergency cease and desist order to enjoin a different firm impersonating a different notice-filed investment adviser. The firm was using spoofed internet websites and social media accounts to recruit clients – and even presenting contracts with forged signatures of registered parties and a forged notary seal.
“It’s all about trust,” said TSSB Enforcement Director Joe Rotunda. “Scammers know you’ll hesitate before investing with an unknown online startup. They also know you are much more likely to invest with an established company – especially a licensed company. As a result, scammers are trying to trick you into believing they are an established or licensed company.”
The Texas State Securities Board publishes guidance for conducting due diligence and investigating investments. Investors can access the material on the agency’s website at www.ssb.texas.gov.
Contact – Joe Rotunda, Enforcement Director, at email@example.com or 512-305-8392.