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Nov. 12 — The Securities and Exchange Commission Nov. 12 charged two people in India with running a fraudulent investment scheme and using social media to lure would-be investors with promises of high returns.
Pankaj Srivastava and Nataraj Kavuri used pseudonyms on Facebook, Twitter and other social media sites to attract investors to their website, Profits Paradise, which promised 120-day investment plans with between 1.5 and 2 percent daily returns, the SEC said.
The SEC said the pair violated Section 17(a)(1) and (3) of the 1933 Securities Act. The agency sought a cease-and-desist order in an administrative proceeding, as well as civil penalties and disgorgement.
“Srivastava and Kavuri used excessive secrecy in their effort to swindle investors through social media outreach and a website that attracted as many as 4,000 visitors per day,” Stephen Cohen, the SEC's associate director of enforcement, said in a news release.
Identity of the defendants' counsel wasn't immediately available.
The SEC said the pair posted on Profits Paradise's Facebook page promising “high profits generated by our financial experts” and “hassle free income,” without listing a mailing address, phone number or name of anyone at the company.
The pair also tweeted about pooling investments and offering “3 lucrative plans,” the SEC said.
The agency also updated a related investor alert Nov. 12, warning of online scams solicited through social media that “too good to be true,” promise guaranteed returns or pressure investors to buy immediately.
Profits Paradise was never registered with the SEC, the agency said.
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