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Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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NEWSLETTERS & ALERTS
‘YouTube or Netflix for Kids’ - Promoting with Cold Calls
[Photo: Cold Caller]
by Howard Haykin
You received a cold call promoting Toon Goggles, Inc., a Los Angeles-based company that marketed itself as “YouTube or Netflix for kids.” Thousands of people were called - you and 400 other individuals invested a total of $19 million for the chance to “get in on the ground floor” of this company. For some investors, this seemed like a once-in-a-lifetime opportunity.
WHAT YOU WERE TOLD. Ira Warkol, the company founder, and his team of cold callers who operated out of a boiler room, said that Toon Goggles was an "on-demand entertainment service that offered online streaming of cartoons, live-action shows, games and music through its ToonGoggles website and mobile applications.”
WHAT YOU WEREN’T TOLD. wAmong other things: (i) all sales were illegal; (ii) from 2012 through 2016, the company was not profitable, and its revenues never exceeded $200,000 a year; (iii) Toon Goggles didn’t keep accurate records of its sales, and to this day doesn’t know the total number of investors or the total amount of capital raised; and, (iv) a large chunk of the funds went to pay for sales compensation to Warkol and his sales agents.
INVESTORS BEWARE OF COLD CALLING ... a technique in which salespersons contact individuals – typically by phone or telemarketing - who have not previously expressed interest in the offered products or services. While cold calling can be annoying, it’s not illegal.
That said, cold-call promotions are risky and should be avoided. Potential investors likely know next-to-nothing about the caller or the company, or if any comprehensive appraisal - i.e, due diligence - was ever conducted on the issuer, its business and its current need for funds.