September 7, 2011
To the SEC,
Over the past few years, since 2007, I have submitted several tips to the SEC based on evidence I gathered for my own junk fax lawsuits() against firms conducting "pump and dump" scams with OTC securities. These tips, given to Joanne Morris in Los Angeles, Tim Leiman in Chicago and Neil Welch in Washington have on occasion been used in their cases.
Based on my experience I have the following suggestions to changes in the securities laws
1st- Remove the shell company clause that allows firms to take over a security, change its name or keep it to hide the fact that they are not a legitimate business, only wanting to scam investors. If a firm doesn't have the backing for an IPO, they arent a safe investment.
2nd- No changing of names of a security simply to make people think they are a new firm.
In example take Li-Ion Motors and Sky Power. On both of their websites they announce that they are partnering/merging. Great news except they are already the same firm, each having a few former corporate aliases (superlatice power, ev innovations, hybrid technologies etc) They have had the same city of their offices- Las Vegas Nevada, (a sure sign of corruption)and have the same factory in North Carolina. There is no lawful reason to allow a firm to change their name, at least not without prominently placing the former name with the new one to prevent investors from thinking they are actually a new firm
3rd- Double checking/due diligence of a firm by the SEC to make sure they exist.
Many of the addresses given by firms are nothing more the mail boxes at UPS or Fedex stores. If a firm isnt big enough to actually have offices, they aren't big enough to be a safe investment. This double checking can be done with such tools as Google Maps, using the street view to see if it is an actual business address or a UPS store in a strip mall.
4th- Spread the enforcement efforts to other Federal agencies and cover securities law with other federal laws-
Mary Shapiro has publicly stated that the SEC is inundated with tips and cannot check on all of them. If securities are a monetary instrument like cash money, why not consider them to be money, and like all false money, have the US Secret Service investigate them for Forgery?
Another angle is to use the Patriot Act to really hurt scammers. When one looks at the effect that bad investments have had on the security of our Nation, such as the reduction in our credit rating, it is clear that stricter laws and punishments are needed. If scammers can be considered terrorists, what scammer would want to wind up in Guantamano Bay with a hood over their head? There is ample precedent for this with the restrictions on Sudafed (pseudophedrine) which was declared a restricted drug by President Bush because it can be easily used to make crystal methamphetamine, which was considered to be a threat to national security.
I thank the SEC for the opportunity to present my thoughts and hope they can make our nation's securities safer for investing