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“Whiz Kid” Settles Fraud Claims with SEC for $1.5 Million

By Kelly B. Mourning, Esq. of Shustak Reynolds & Partners, P.C. posted on Monday, October 3, 2016.

 In 2014, the Securities and Exchange Commission warned investors that investment newsletters can be used as a means to perpetrate fraud. In the wake of that advice, it appears the SEC is cracking down on parties peddling newsletters that purport to provide expert trading advice to the public but are actually premised on false performance claims or other inaccurate representations.  

The SEC recently announced that Manuel E. Jesus a.k.a. Manny Backus and his newsletter company Wealthpire, Inc. have agreed to pay $1.5 million to settle a lawsuit. According to the SEC complaint, Backus and Wealthpire used advertising materials and websites to claim that Backus was “the untutored prodigy of stock investing” in an effort to obtain subscribers. The complaint alleges that the newsletter was marketed to the public under the guise that it would provide Backus’s “expert” tips to the stock-trading world, including alerts to subscribers that would allow them to follow his stock trades and mirror his moves. The problem, according to the SEC complaint, is that Backus was not actually trading the stocks identified in the newsletter service and Backus did not always provide the advice in the newsletters.  

The lawsuit was settled without admitting fault but it is a good reminder to advisors and investors alike, it is important to research the source of your investment advice.

Shustak Reynolds & Partners P.C.’s FINRA attorneys and financial services lawyers in San Diego, Irvine, Los Angeles, San Francisco and New York have extensive experience representing brokerage firms, RIA firms, high-net-worth investors in a variety of securities disputes, including FINRA arbitrations, petition proceedings to vacate or confirm arbitration awards, FINRA and SEC investigations and enforcement actions. Contact us today for a confidential consultation.  

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