The Securities and Exchange Commission has filed a federal securities claim against Fleet Mutual Wealth Limited and MWF Financial Limited, parent companies of Mutual Wealth. According to court documents, the SEC believes Mutual Wealth to be “an emerging, fraudulent pyramid scheme masquerading as an international investment firm,” Courthouse News Service’s Securities Law Review reports.
The SEC is seeking a permanent injunction, disgorgement of all misappropriated funds and civil penalties from Mutual Wealth, into which at least 150 investors have already trusted more than $300,000, according to the lawsuit.
Mutual Wealth claims to use a high-frequency trading strategy to invest client funds, which allows funds to be invested into securities for just a few minutes. The firm claims these methods can offer investors returns of 2 to 3 percent per week, according to the SEC complaint. Mutual Wealth then encourages these investors to become “accredited advisers,” who recruit new investors on a referral fee or commission basis.
Part of Mutual Wealth’s deception of investors is its website, active since January 2013, which has a “sleek design and sophisticated veneer” aimed to dupe investors into thinking the company is a legitimate investment firm, the SEC claims.
“Almost nothing Mutual Wealth represents to its investors is true,” the SEC alleges in its complaint, as reported by the Securities Law Review. “The company does not purchase or sell securities on behalf of investors. Rather, it diverts investors’ money to offshore bank accounts held by shell companies.”
The SEC also maintains that Mutual Wealth’s headquarters in Hong Kong do not exist, nor does its data-center in New York or the “executives” it lists on its website. The firm also claims to be registered with the Commission, which it is not.