The Mark Is In Play

Apr 24th, 2009 – Comment

The bulk of the resources we spend as a society for law enforcement is spent chasing the same bad actors day in and day out.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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The Con Is On

David from Oakville, Ontario writes:

How is it possible to recover from scam artists. How do you shut them down. SEC doesn’t seem to care. They operate in Canada, USA, Cayman Islands.

Thank you

Hi David, Thanks for your email. To save us both a ton of time in court I have chosen not to list the companies you mentioned and will deal with the issue of financial crimes in general. I feel your pain having gotten skinned a few times myself. Here’s what I have learned..

The bulk of the resources we spend as a society for law enforcement is spent chasing the same bad actors day in and day out. That means we have to prevent ourselves from falling into traps set by sophisticated predators.

You mentioned that the company that you invested in traded over the counter in the U.S. on the Pink Sheet grey market. The first lesson to learn from this is to avoid high risk environments. If you want to play cards its always better to frequent a reputable casino that is regulated by some arm of the government, as opposed to taking on the risk of playing in an unregualted road house.

The over the counter market in the U.S. is for all intents and purposes a road house. It is totally unregulated and as such will attract operators who seek an opportunity to do business with no oversight. If you are thinking about investing in a company and they trade OTC a warning flag should go up and your capital preservation warning system should move to defcon one.

The other part of your question is in regards to the Securities and Exchange Commission and their role as the marshall of the saloons in Dodge City. What you need to know about government regualtory agencies is that they have two main functions. They create regualtions, and conduct investigations. Most of their time and resources are devoted to those two activities. They spend very few resources on financial crime prevention.

If you find yourself in Dodge City with a pocket full of cash and you think that the local Marshal will be of any help in recovering your money after you have been fleeced you are living in a dillusion. Take steps to protect your capital by avoiding high risk environments and don’t for a minute believe that you will get satisfaction from the SEC.

Happy Capitalism!

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