In March 2014, the Securities and Exchange Commission (“SEC”) released guidance on social media use by registered investment advisers. The SEC announced charges yesterday against Keiko Kawamura, who is accused of defrauding investors through Twitter, Facebook, and other social media channels.
An SEC investigation found that Keiko Kawamura engaged in two separate fraudulent schemes to raise money from investors while posing as an investment and hedge fund expert. In one scheme, she sought investors for her self-described hedge fund and posted on Twitter some screenshots of brokerage account statements that were not hers, suggesting she was obtaining incredible investment returns. In lieu of investing the money she raised from investors, she spent it on living expenses and getaways to Miami and London. In another scheme, in an effort to attract investors to a subscription service for investment advice, Kawamura falsely told subscribers that she had been in the investment banking industry for nearly a decade and had achieved 800 percent returns in her personal brokerage account.
“Investors should beware of fraudsters who use social media to hide behind anonymity and reach many investors with little to no cost or effort,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.
The SEC’s order instituting administrative proceedings alleges that Kawamura willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 20(4)-8. The administrative proceedings will determine any remedial action or financial penalties that are appropriate in the public interest against Kawamura.
The SEC’s investigation was conducted by Brent Smyth and Finola H. Manvelian of the Los Angeles Regional Office. The SEC’s litigation will be led by Donald Searles.
For more information about protecting investors from social media fraud, go to the SEC Investor Alert: Social Media and Investing – Avoiding Fraud.