A Beverly Hills, Calif.-based live chat service giving investment advice operated without licensing for years, illegally selling its services to users, according to a lawsuit filed by state Attorney General Xavier Becerra.
On Thursday, Becerra’s office charged AwesomeCalls and AwesomeCallsTrading with selling memberships for a “live chat” option where they recommended trades to those members while not registering as advisors at the state or federal level. The pandemic’s effect of boosting the number and frequency of day traders means even more attention needs to be paid to investor protection, he said.
“You wouldn’t take legal advice from a fake lawyer, or medical advice for a fake doctor,” he said. “AwesomeCalls is improperly giving investment and stock trade advice while masquerading as a neutral educational forum.”
AwesomeCalls was formed in 2014 by founder and CEO Anthony J. Haworth, according to the suit filed by the attorney general’s office. Haworth was also named as a defendant in the complaint. According to the suit, AwesomeCalls sold daily, weekly and monthly subscriptions to the service, which offered, among other things, a list of suggested stock trades “timed to the daily movements and fluctuations of the market” in a members-only chat room before the start of each trading day. The company boasted in advertisements that these investments had a success rate higher than 90%, according to the complaint.
AwesomeCalls and Haworth were not immediately available for comment.
The company also would advise its members in the chat on when they should make the trades on those stocks, and they’d also answer questions from members throughout the trading day on particular transactions or more general questions, according to the suit. Those people operating the chat would also tell members about their own stock trades, encouraging them to follow suit. According to the company site, it offered one-on-one sessions in addition to its membership options.
But the state’s complaint argued the firm was operating a for-profit business touting investment strategies and stock picks to paying members while lacking accreditation, and the state asserted that the company’s marketing materials didn’t substantiate its claims that members could profit by following that advice.
“Contrary to the bold claims on defendants’ home page and social media about how the live chat service will guide customers to profitable securities trades, the fine print on the ‘terms of service’ section of defendants’ website provides a starkly different message; boilerplate warnings that customers should not buy or sell any securities based on the advice provided by AwesomeCallsTrading and should rely instead on customers’ independent research,” the complaint read.
According to the suit, Beccera’s office informed the company in December 2020 that their services “constituted investment advice necessitating a valid certificate” to conduct such business. While Haworth filed paperwork to the state seeking to dissolve two companies around the same time, he continued to operate the business, according to the complaint.
In the complaint, the state argued that the company should pay at least a $1 million civil penalty and at least $1 million in disgorgement and/or restitution. Beccera is currently under consideration by the U.S. Senate to be confirmed as the secretary of Health and Human Services in President Joe Biden’s administration.