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All of us have heard the phrase "too good to be true." And most of us know to be skeptical of any claims a company makes on its potential for growth. So, when an entrepreneur tells potential investors that value in the firm will increase by 25,000 percent, that would be enough of a red flag to scare us off.

But not big enough, apparently, for investors into rapper/actor T.I.'s cryptocurrency, FLiK Token. The currency opened at a price of about six cents per token, and was touted to hit $14.99 within 15 months. That didn't quite materialize -- FLiK Token is currently trading at less than a single cent -- and those investors are pissed. They're suing T.I. (née Clifford Joseph Harris Jr.) and cofounder Ryan Felton, looking for $5 million in compensation for what they're calling a cryptocurrency pump-and-dump scheme.

The Great Smoky Mountains are gorgeous. So, of course the prospect of a dream vacation in the Smokies is going to appeal to quite a few people. And if you pay for that dream vacation by, say, investing in a Gatlinburg timeshare, you'd like to actually go on that dream vacation.

But according to a recent lawsuit, one Tennessee resort was using high-pressure sales tactics to sell timeshares, and then never allowing buyers to visit.

You may have heard about predatory payday loans, wherein lenders give consumers cash advances based on their payroll and employment records. These loans often come with exorbitant interest rates, leading consumers to borrow more money, diving deeper into debt. But why make cash-strapped consumers come to you with their pay stubs, when you can just mail them a check, hoping they'll cash it and start the spiraling debt cycle themselves?

That's the latest predatory loan scheme, and its backers may be surprising.

Coinbase Overcharging Users and Emptying Bank Accounts

Keep an eye on your bank account! It's good advice at all times, but for cryptocurrency enthusiasts it's especially true right at the moment. Customers of Coinbase, a cryptocurrency exchange, are reporting that the company is overcharging, double-charging, and in some cases emptying their bank accounts with unauthorized transactions.

The Securities Exchange Commission has announced enforcement actions against 27 different entities and individuals connected to the deceptive dissemination of promotional news about stocks. The actions allege that these entities and individuals promoted stocks or investments without disclosing financial ties to the stock or investment.

Specifically, the individuals and entities were charged with deceiving investors by failing to disclose that published information was not independent, nor unbiased. Under federal securities law, if a company or individual publishes information promoting a stock or investment, the writer or publisher must clearly state whether the information was paid-for, or if the writer or publisher has a self interest in promotion.

Everything seems automated these days. And the amount of data out there seems infinite. This is especially true in the investment world, where computer programs can execute trades in nanoseconds and the smallest piece of information can make the difference between profits and pitfalls. So it only seems natural that, at some point, robots would replace humans as financial advisors.

So-called "robo-advisors" are the hot new thing, and, as with any new invention, the regulators are on their way. The Securities and Exchange Commission (SEC) has, for the first time, included "electronic investment advice" on its annual list of examination priorities. So what regulations are in store for robo-advisors?

SEC Warns Investors of Impersonators Offering Fake Relief

Last month, the Securities and Exchange Commission (SEC) issued a frightening warning to investors who've been the targets of fraud. There are impersonators targeting these victims again, offering fake legal services and other fraudulent relief.

The SEC warns that not all correspondence appearing to come from the agency is real. Whether or not you have been the victim of an investment fraud in the past, be very careful when considering mail supposedly originating from the government. Let's consider what the SEC knows and how you can spot a fake.

There is one group of people with job security in Silicon Valley these days, and that's the legal team at chip giant Intel. No sooner than a cease fire in the decades-old war with major rival AMD is announced, a new fight breaks out with the FTC over alleged anti-competitive practices. Oh, and there is a small matter to settle over unfair business practices with European regulators and a suit by New York AG Andrew Cuomo, but that's another story. Or two.

Today, the FTC announced that despite settlement talks with Intel, it has filed its complaint against the company, citing "illegal monopolization, unfair methods of competition and deceptive acts and practices in commerce." This broad language doesn't quite reveal what is likely to be the crux of the action, issues surrounding Intel's product pricing, whether it purposely designed its software to run better on computers containing its chips than on machines containing its competitor's products, and alleged threats it made to major computer suppliers (such as Dell and HP) to coerce them into using Intel chips in their products.

According to Keith Hylton, antitrust professor at Boston University's school of law, the FTC may have a tough time proving its case that Intel manipulated its prices to cut out competition. However the issue over design, which was the core of the United States' landmark case against Microsoft earlier this decade, will likely be more successful.

In addition to the allegations in the FTC's complaint, the Commission is concerned about where the empire will strike next. They have their eye on Intel's actions in the graphics processing unit (GPU) market and are concerned that Intel will take its monopolistic practices to this new arena. Needless to say, up and coming graphics chip maker Nvidia, "applaud[s] today's action by the U.S. Federal Trade Commission."

As always, Intel came out swinging. In its press release this morning, the company called the FTC case "misguided." Intel senior vice president and general counsel Doug Melamed added, "Settlement talks had progressed very far but stalled when the FTC insisted on unprecedented remedies – including the restrictions on lawful price competition and enforcement of intellectual property rights set forth in the complaint -- that would make it impossible for Intel to conduct business."

AMD had no comment.

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Pelosi: "The Party's Over," New Bank Regs Pass House

Financial reform is one step closer after the House passed legislation concerning new regulations, agencies and oversight on a 223-202 vote. As Nancy Pelosi remarked, "We are sending a clear message to Wall Street, the party is over. Never again will reckless behavior on the part of the few threaten the fiscal stability of our people." This bill overall appears to be good news for the financial consumer, but there were a few things left undone as well. The bill does accomplish several things that will set up some strong new regulations and oversight abilities to reign in potentially risky financial activities. The following is a quick breakdown of the bill's main accomplishments:

  • Sets up the Consumer Financial Protection Agency, which will be responsible for the regulation of consumer products such as credit cards and mortgages.
  • Allows congress to audit the activities of the Federal Reserve.
  • Extends new regulation over derivatives, one type of financial product blamed for the current financial crisis.
  • Creates a new counsel to conduct oversight on major problems at large financial firms.
  • Gives regulators more powers to break up companies that have grown to big.
  • Give shareholders a right to a non-binding proxy vote on corporate pay packages.

The bill will also shift $1 billion of bailout money into federal neighborhood stabilization programs to develop abandoned or foreclosed homes and transfer $3 billion from the federal bailout program for emergency loans to prevent foreclosure.

What did the house fail to add to this bill? First, there will be no regulation of auto loans, one of the most common consumer loans. Another amendment, that would have given bankruptcy judges new powers to lower balances on mortgages in order to prevent homeowners from losing their homes in foreclosure, was also voted down and will not be included in the bill.

Still, President Obama believes the bill will help protect consumers overall. In a statement he said, "This legislation brings us another important step closer to necessary, comprehensive financial reform that will create clear rules of the road... ."

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On Monday, Merck & Co., and the investors who filed securities suits against it, had their day in court. Investors in Merck are suing the company over the misrepresentation of the safety of Vioxx (or lack thereof) which allegedly caused them to pay an inflated market price for company stocks.

(To begin with, the risks associated with Vioxx are not at issue in this Vioxx suit. Vioxx has already paid out billions to settle claims by the people physically harmed by the drug. This case is simply about whether Merck also screwed its shareholders in its handling of the Vioxx debacle.)

The Supreme Court heard arguments from the parties centering around the question of whether the shareholders had waited too long to file their lawsuit. In federal court, the securities fraud statute of limitations deems that any lawsuits suit must be brought within two years of the time investors knew about or should have suspected fraud.

Here, Merck made a novel argument. Merck lawyers claimed that the shareholders' suit should be dismissed because they knew or should have known about the possible fraud committed by Merck as early as 2001, but instead, waited until 2003 to file suit. In September of 2001, the FDA sent a warning letter to the company, alleging misrepresentations regarding the drug's potential to increase a patients' risk of heart attack. On the other hand, Merck said, the investors don't have a enough evidence against the company to prove securities fraud.

Simply put, the shareholders should have known about the fraud that did not occur, and filed the suit earlier. This would mean that the plaintiffs should have known that Merck was lying as it denied the risks associated with Vioxx for years, but at the same time that the plaintiffs could not make a case that the company lied.

A tough sell, no doubt. 

Some of the judges were justifiably skeptical about this line of reasoning. Justice Anthony Kennedy told the Merck attorneys, "Companies can't have it both ways."  Justices Scalia and Ginsburg considered another distinction that might assist the shareholders, asking Merck lawyers whether the FDA letter demonstrated only "misrepresentations" on the part of Merck, not the out and out fraud that would start the securities fraud statute of limitations clock ticking.

Attorneys for the investors faced slightly less difficult questions. However, Justice Sotomayor asked why investors filed their suit a whole year before the Wall Street Journal article supposedly central to their case was even published. Mr. David Frederick, for the investors, replied that the initial suit was prompted by a Harvard study regarding increased heart attacks in Vioxx users and was actually amended later to include information from the WSJ article when it was available.

A decision is expected early next summer.

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