SEC Had an Easy Time Busting a Fintech Company and Its Wizard CEO

This post originally appeared in Money Stuff.

There's a fairly straightforward way to do a stock scam. You found a company, you take it public, you keep control of most of the stock, you issue press releases saying that you've discovered a cure for cancer or whatever, people get excited, the stock goes up, you sell a bunch of it at the inflated price, you go to Belize. This is a good and popular scam but there is an important weak point in the procedure. When you sell stock to the public, as the controlling shareholder of a public company, you generally have to do a registered securities offering and deliver a prospectus to potential buyers. The prospectus has to have a lot of disclosure, and audited financial statements, and might be reviewed by the Securities and Exchange Commission.