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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.” Out of thousands of people 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 also seemed like a once-in-a-lifetime opportunity.
YOU LEARNED … from Ira Warkol, the company founder, and his team of cold callers who operated out of a boiler room, 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 … was that: (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 knows nothing about the caller or the company, and if any due diligence (comprehensive appraisal) was conducted on the issuer, its business and its current need for funds.