 |
| Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia) |
Back in 1971, when MLM first came upon the scene, SEC had ALREADY recognized the danger of "profit-sharing" schemes that are falsely marketed as "not investments". You are welcome to read the full SEC "interpretation", but here's an excerpt (with some sections bolded by me):
The Securities and Exchange Commission has considered-the applicabllity of the securities laws to multilevel distributorship and other business opportunities that are being offered to prospective participants through pyramid sales plans. The Commission believes that the operation of. such plans -often Involves the offering of an "Investment contract" or a "participation in a profit-sharing agreement," which are securities within the meaning of section 2(1) of the Securities Act of. 1933. In such cases the security involved-the agreement between the offering company and the Investor must be registered with the commission unless an exemption is available. In the absence of registration or an exemption, sales of these securities violate section 5 of the Securities Act.
Moreover, any person who participates in the distribution of these securities may be a broker as defined In section 3(a) (4) of the Securities Exchange Act of 1934 and, unless an exemption Is available, would be · required to register . as such. pursuant to section 15(a) m . of that Act. For example, this might include, among others, persons who, for a finder's fee, commission, bonus or other compensation, induce others to become participate in the plans for the purpose of recruiting still other participants.
In addition, where deceptive acts ·and practices. are committed in connection with the offer or sale of these securities, those responsible violate the antifraud provisions or section 17Ca) of the SecurIties Act and sections 10(b) and 16<c> (1) of the Securities Exchange Act and Rules 10b-5 and 15cl-2 under that Act.
That's right, 40+ years ago, SEC realized that MLM profit-sharing is very likely just offering securities without a license, and any one recruiting people to buy such can be considered a "broker". That means EVERYBODY, from the company to the participants, are breaking laws left and right. Unregistered company, unregistered stock, unregistered broker, unfiled disclosures... Add fraud and such, and you have a criminal enterprise.
This blog is one of the first to raise the issue with Zeek Rewards potentially violating Securities Laws, dated June 2012, two months before SEC shutting down Zeek Rewards. It was mentioned even earlier on my Zeek Rewards analysis hub first published April 2012. Profit-sharing is very likely illegal of if requires your own buy-in, due to the securities laws explained above.
Since Zeek went bust, multiple "profit-sharing" MLMs / Ponzi schemes have left the US hoping to find a safe haven for their fraud.
Only goes to prove that there really isn't a "new" crime under the sun. It's just ignorance by the victims to recognize old signs of crime.
This comment has been removed by a blog administrator.
ReplyDelete