From today's SEC Digest:
SEC HALTS FRAUDULENT INTERNET "VIRTUAL STOCK EXCHANGE" AND FREEZES OVERSEAS ASSETS
The Commission announced today the unsealing of a temporary restraining order and asset freeze issued by the U.S. District Court in Boston against SG Limited, based on allegations that SG operated a massive pyramid scheme offering investments in a "virtual company" over the Internet. According to the Commission's complaint, SG, located in the Caribbean nation of Dominica, operates a website under the name "StockGeneration" promising investors a risk-free, guaranteed return of 10% per month, or 215% per year compounded. SG allegedly described itself as a "virtual stock exchange" offering investments in several "virtual company"stocks, including one the price of which "only rises" and which generates the guaranteed 10% monthly return. According to the Commission, the "exchange" and "companies" are fictional entities that exist only for purposes of SG's investment offering. The Commission alleged that the investment program, which raised hundreds of thousands, if not millions, of dollars was actually nothing more than a pyramid scheme. The Commission further alleged that investors did not receive the guaranteed return and have not even been able to recover their initial investments.
The Commission's complaint, filed on June 9, 2000, alleged that SG Limited violated the antifraud and securities registration provisions of the federal securities laws. On June 9, 2000, the U.S. District Court for the District of Massachusetts granted the Commission's motion for an ex parte order temporarily restraining the fraudulent activities, freezing the assets of SG Limited and the proceeds of the offering, requiring that the funds be returned to the U.S. under control of the Court, and imposing other equitable relief. [SEC v. SG LIMITED, d/b/a STOCKGENERATION, et al., USDC for the District of Massachusetts, C.A. No. 00 CV 11141-JLT] (LR-16590)
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