A few hours after the New York market close on Feb. 1, an obscure Chicago artist by the name of Antonio Lee told the world he had become the world’s richest man.
The 32-year-old painter said Google’s parent, Alphabet Inc., had bought his art company in exchange for a chunk of stock that made him wealthier than Microsoft Corp. co-founder Bill Gates, Berkshire Hathaway Inc.’s Warren Buffett and Amazon.com Inc.’s Jeff Bezos -- combined.
Of course, none of it was true. Yet, on that day, Lee managed to issue his fabricated report in the most authoritative of places: The U.S. Securities and Exchange Commission’s Edgar database -- the foundation of hundreds of billions of dollars in financial transactions each day.
For more than three decades, the SEC has accepted online submissions of regulatory filings -- basically, no questions asked. As many as 800,000 forms are filed each year, or about 3,000 per weekday. But, in a little known vulnerability at the heart of American capitalism, the government doesn’t vet them, and rarely even takes down those known to be shams.
“The SEC can’t stop them,” said Lawrence West, a former SEC associate enforcement director. “They can only punish the filer afterward and remove the filing from the system. So, caveat lector -- let the reader beware.”
Honor System
Congress has already raised the alarm. For its part, the SEC, which declined to comment, has said those who make filings are responsible for their truthfulness and that only a handful have been reported as bogus. Submitting false information exposes the culprit to SEC civil-fraud charges, or even federal criminal prosecution.
For now, even the wildest claims are taken at face value. Consider Lee, who said his Alphabet shares were worth $3.6 trillion, almost two-thirds of the value of the 30 stocks in the Dow Jones Industrial Average.
In an interview, Lee said he had once made a living as a barber and a rental agent before turning to art. The company he claims to have sold to Alphabet has the unlikely name of YNoFace Holdings. It’s a nod to Lee’s specialty: acrylic paintings in which the subject has no face. On its website, the company has a striking symbol: a man in a red tie, his cheek resting on one hand, his face blank except for a red question mark.
“I always wanted to be wealthy, so I could have more free time with my family,” said Lee, a divorced father of three.