The US Securities and Exchange Commission (SEC) hit affiliate marketers related to binary options schemes with record fines this year. Timothy Atkinson, his former business partner Jay Passerino, and their business ‘All in Publishing’ were accused of marketing fraudulent binary options to US customers on behalf of their associated brokers. They imposed these individuals with over $60 million in fines as three US-based binary options marketers bore the brunt of the action.
The SEC today announced the final judgment orders by a Florida federal court against the two affiliates, as well as another marketer called Michael Wright, who “aided and abetted the fraud.”
The complaints allege that the fraud scheme has been going on since at least 2013 through July 2017, and involved fraudulent ad campaigns that relied on other marketers, known as “affiliates,” to promote trading systems and websites. They attracted their victims by sending misrepresentations about the trading platforms, also paying video producers to make fraudulent testimonials promoting the trading systems.
While the SEC describes the defendants’ ads as ‘pure fiction,’ the people in the videos told viewers that they were “enjoying rich lifestyles from trading binary options” and purported to show them that their trading balances increase automatically in live accounts.
The penalties have been the highest ever in such a case, and all three defendants have agreed to settle with the SEC. They will pay $61.5 to the regulator in lieu of disgorgements, ill-gotten gains, and penalties. More specifically, All in Publishing and Atkinson will pay $27,208,987 in disgorgement of their ill-gotten gains and pre-judgment interest of $2,824,935. Apart from that, they will pay a civil penalty of $27,208,987.
Passerino will pay a disgorgement of $1,894,991, civil penalty of $1,894,991 and a pre-judgment interest of $220,431. Wright will pay $266,353 to resolve cases pending against him.
Meanwhile, the CFTC has also filed complaints against the affiliate marketers for using misleading pitches, false claims, and promoting get-rich-quick schemes. The regulator suggests that this fraudulent content was viewed millions of times and at least 50,000 people opened their accounts with different unregulated brokers directly because of the ads.