A self-proclaimed “stock-trading whiz kid” and his stock newsletter company in Los Angeles have agreed to pay nearly $1.5 million to settle charges that they defrauded subscribers through false statements and misrepresentations, the Securities and Exchange Commission announced Tuesday.
Manuel E. Jesus and his newsletter company Wealthpire Inc. used advertising materials and websites touting him as “the untutored prodigy of stock investing” under the alias Manny Backus, but he did not even invest in the stocks he was promoting, according to the SEC’s civil complaint.
Backus promoted himself as a math whiz with a “skyscraping” IQ who was trading in the stock market at age 19. The SEC’s complaint also says Wealthpire materials claimed Backus made millions of dollars before deciding to help other investors by starting an alert service that let traders copy his every trading move.
The complaint says that between 2012 and 2014, Backus was not trading in the same stocks recommended by his services as he claimed and he was not the one making the stock recommendations.
Backus had one stock-picking alert service that told subscribers he had made historic trading recommendations that yielded huge past returns higher than 1,400 percent, the SEC says.
“Investors who subscribe to trading alert services are relying on the purported expertise and success of those making the stock recommendations, but Wealthpire and Backus instead circulated repeated lies and falsehoods,” says Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.
Without admitting or denying guilt, Backus and Wealthpire agreed to pay disgorgement of $1,135,145 plus interest of $112,902, and Backus also must pay a $235,000 penalty.