Securities Bulletin

              SECURITIES bulletin
This issue of the Securities Bulletin includes an
article on several Illinois investment brokers
who scammed investors out of their hard
earned money. At one time, these brokers
were registered and worked for registered
broker/dealers. It is unfortunate that they
strayed from the requirements of their
profession and stole people’s money.
I want to assure Illinois citizens that the
majority of registered investment brokers have
a clean disciplinary history and do not engage
in fraudulent practices. But it is those few who
do that puts us on the defensive and requires
us to be extra cautious. Investors should not
do business with non-registered individuals
promising high rates of return and low risk.
Cases involving agents who are not registered
with the department often result in losses that
cannot be recovered. On the other hand,
complaints against registered brokers often
can be resolved through the organization
through which they are associated.
I also want to remind members of the
securities industry that I welcome your help in
getting unscrupulous brokers off the street. To
file a complaint regarding an investment or to
report an individual
selling securities who is
not registered with the
Securities Department,
please call my office at
800-628-7937.
Jesse White
Secretary of State
Winter 2002
More than $4.5 million in fraud alleged
The Illinois Securities Department has taken administrative action
against eight Illinois investment brokers for defrauding their clients of
more than $4.5 million. All the brokers are alleged to have withdrawn
money from client accounts without the clients’ knowledge,
converted the money for their personal benefit, or borrowed money
from clients in exchange for promissory notes, a practice prohibited
in most cases by securities regulations.
“With recent cases like Enron and WorldCom coming to the forefront,
it has become critical for securities regulators to take a proactive
approach to safeguarding the interests of investors through tougher
enforcement,” said Secretary of State Jesse White. “Our Securities
Department is doing just that, and the investing public can rest
assured that we will continue to do everything in our power to
ensure the integrity of the securities industry in Illinois.”
(cont. on page 2)
White announces disciplinary action
against eight investment brokers
The U.S. Department of Justice has advised the public not to respond
to e-mail solicitations, faxes or letters claiming to be from individuals
living or working in Africa and asking for personal financial information.
In recent months, Internet users throughout the United States have
reported a significant increase in e-mails coming from individuals
who claim to be foreign nationals. These scams are commonly
referred to as “419 fraud,” named after the Nigerian penal code. The
solicitations vary but typically include references to known historical
events, such as well-documented plane crashes resulting in loss of
life or widely publicized foreign political upheavals. In each case, the
person receiving the solicitation is recruited to help resolve a
financial problem involving millions of dollars. The sum of money
varies, as does the amount promised for confidential and quick
response. In each case, when financial information such as an
individual’s bank account number has been sent to the originator of
the e-mail, substantial loss occurs.
If you have received such an e-mail, do not respond. If you suspect
you have been a victim of one of these schemes, contact the U.S.
Secret Service at www.ustreas.gov/usss/alert419.shtml, or call
202-406-5850. E-mails received but not responded to may be
forwarded to the Federal Trade Commission at uce@ftc.gov for their
“spam” database.
“419” schemes on the Internet
IN
THIS
ISSUE
• EIGHT ILLINOIS BROKERS CHARGED •
• “419” INTERNET SCHEME •
• INVESTOR EDUCATION •
• EASIER ACCESS TO REGISTRATION FORMS •
• FROM THE DIRECTOR’S OFFICE •
A NEWSLETTER OF THE ILLINOIS SECURITIES DEPARTMENT • SECRETARY OF STATE JESSE WHITE