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April 26, 2013

SEC aims to protect investors from fraud under new law

The rules aren’t even in place yet, but allegations of fraud are already flying.

The Securities and Exchange Commission is crafting rules to implement a new law that makes it easier for private firms to raise money. But it has been struggling over how to do so in a way that protects investors from fraud.

On Thursday, the agency criticized a Washington firm and its owner, Daniel F. Peterson, for allegedly using the new law to lure investors into forking over cash for a phony deal that promised what they called “fictitious” returns. Peterson denied the allegations.

In a civil complaint, the SEC accused Peterson of telling investors that the law — known as the Jobs Act — would enable him to raise billions of dollars from the general public and generate 10-year returns of up to 1,300 percent for early investors.”

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Read full Washington Post article here

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