12Daily Investigation V and the SEC Warning
The SEC's "alert" in my opinion is pointless, and in some cases will do more harm than good. Business opportunities frauds will use the alert as "proof" the that SEC has said that autosurf programs are legal. This will become common knowledge around net: "first there were bad programs, but now the SEC regulates autosurf programs and they are all legal."
It is also pointless in its generality. Here is the SEC's advice:
* If it sounds too good to be true, it probably is. Compare promised yields with current returns on well-known stock indexes. Any investment opportunity that claims you'll get substantially more could be highly risky --- and that means you might lose money.* Check out the company before you invest. Contact the secretary of state where the company is incorporated to find out whether the company is a corporation in good standing. Also call your state securities regulator to see whether the company, its officers, or the promoters of the opportunity have a history of complaints or fraud. If a supposedly upright business lists only a P.O. box, you'll want to do a lot of work before sending your money!
* Steer Clear of Testimonials. Watch out if the company's promotional materials, contain "testimonials" from supposedly satisfied customers, especially if all the "testimonials" are full of praise.
* "Guaranteed returns" aren't. Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you'll most likely get a low return. High returns represent potential rewards for folks who are willing to take big risks. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are "guaranteed" or "can't miss." Don't believe it.
As academic philosophers like to say, everything the SEC says which is true doesn't matter, and what does matter the SEC is wrong about.
The True Statements which don't Matter
1. Check out the company before you invest.
Really? Here is little clue, state regulators aren't going to tell if an investigation is under way, nor will they give you a legal opinion whether an autosurf program is unregulated seller of unregistered securities. History of the promoters? Trying looking that up with a google search.
2. If it sounds too good to be true, it probably is.
Of all the pointless statements regulators make, this one annoys me the most. Was Google stock "too good to be true" at $85, Apple at $18.00, or Microsoft at $25.00? Something is only too good to be true after it is shown to be a fraud. Did all of those careful investors in Enron realize those off balance book partnerships were too good to be true? Of course it is too good to be true, when it is a fraud - that is what constitutes a fraud. But frauds don't have a little "too good to be true" badge on them. That would be too good to be true.
The False Statements which do Matter.
3. Guaranteed returns aren't.
Has anyone from the SEC actually read the marketing material of 12DailyPro, Storm Traffic and other autosurf programs? They explicitly say in their materials that there are no guarantees, but show with their testimonials and other marketing material that money is to be made, with little effort and the possibility of large returns - if you can only "game" their system. It precisely the programs clever ambiguity with respect to guaranteed returns which make them effective.
4. Stay clear of testimonials.
Would anyone expect a reputable company to post testimonials which were not full of praise? More importantly, in a Ponzi scheme there must be people who make money! Wouldn't you expect them to give a testimonial?
It is not being full of praise that matters; what matters is whether the testimonial is akin to the reporting of an economic miracle or not. Individual testimonials are hard to ignore because we generally frame the problem: is this person lying or not?
But for economic miracles David Hume had the right way to frame the problem: Which is more likely – that a man rose from the dead or that this testimony is mistaken in some way? (my emphasis) All reports of economic miracles ought to be treated in the same way.
