Law Commons^™

"With Friends Like These ...": Toward A More Efficacious Response To Affinity-Based Securities And Investment Fraud, Lisa M. Fairfax

Faculty Scholarship

This article highlights the increase in affinity fraud—securities and investment fraud targeting members of a particular racial or ethnic group perpetrated either by a member of that group or someone claiming to advance the groups’ interests. Affinity fraud differs from other forms of securities fraud because perpetrators establish their credibility and the credibility of their investment schemes by appealing to the trust that group members share, often promising that some of the invested funds will be used to assist the group’s church or ethnic community. This reliance on group trust and sense of community persuades otherwise cautious people to participate …

Cybergossip Or Securities Fraud? Some First Amendment Guidance In Drawing The Line., Lyrissa Lidsky, Michael Pike

Faculty Publications

Fifteen-year-old Jonathan Lebed, the youngest person ever pursued by the SEC in an enforcement action, made over $800,000 in six months by promoting stocks on Internet message boards. Using several fictitious screen names, Jonathan posted hundreds of messages on Yahoo! Finance, hyping selected over-the-counter stocks and then promptly selling his pre-purchased shares as soon as the stock prices rose.

Publicly, the SEC painted a picture-perfect case of securities fraud. Yet, the SEC forced disgorgement of only $285,000 of Jonathan's profits, leaving many observers to wonder why the resolution of this supposedly clear-cut case left its teenaged perpetrator with over $500,000. …

The Wharf (Holdings) Ltd. V. United International Holdings, Inc.: The Supreme Court Breaks Old Ground, Mark J. Loewenstein

Publications

This article analyzes the Supreme Court's decision to decide only one federal securities law case, The Wharf (Holdings) Ltd. v. United International Holdings, Inc. On the face of it, the Court simply affirmed long-standing, uncontroversial tenets of Rule 10b-5. However, the article provides different explanations to the Court's decision.

Securities Fraud In Cyberspace: Reaching The Outer Limits Of The Federal Securities Laws, Constance Z. Wagner

All Faculty Scholarship

This article discusses the increasing use of the Internet for securities transactions, the growth of securitiesfraud perpetrated through that medium and the Securities and Exchange Commission (“SEC”) enforcement program initiated to combat it. The author critiques the position taken by the SEC that the existing anti-fraudprovisions of the federal securities laws can be stretched to cover Internet fraud. Using an enforcement action brought by the SEC against an online stock trading guru named Tokyo Joe as an example of the confused jurisprudence that results when pre-cyberspace law is applied to securities fraud in cyberspace, the author proposes a different regulatory …

'With Friends Like These...': Toward A More Efficacious Response To Affinity-Based Securities And Investment Fraud, Lisa M. Fairfax

GW Law Faculty Publications & Other Works

This article highlights the increase in affinity fraud - securities and investment fraud targeting members of a particular racial or ethnic group perpetrated either by a member of that group or someone claiming to advance the groups' interests. Affinity fraud differs from other forms of securities fraud because perpetrators establish their credibility and the credibility of their investment schemes by appealing to the trust that group members share, often promising that some of the invested funds will be used to assist the group's church or ethnic community. This reliance on group trust and sense of community persuades otherwise cautious people …