FORCERANK APP IS A BRIDGE TOO FAR FOR S.E.C.
17th October, 2016 at 06:18:20
Fantasy sports-style stocks and shares prediction is a no-no.
Whilst fantasy sports has managed to crack the legality barrier on gambling in many states, extending this drive into fantasy stocks and shares is definitely a no-no, according to the US Securities and Exchange Commission, which regulates such matters.
The issue has been triggered by a Forcerank app offering fantasy stock-style competitions, which the regulator claims is in violation of the rather ponderously titled Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, hitting Forcerank with a $50,000 fine to drive the point home.
A spokesman for the enforcement wing of the SEC advised: "The Dodd-Frank Act sought to bring security-based swaps activity out of the shadows, including when it involves retail investors."
The regulator pointed out that no registration statements were in effect for the Forcerank contests, and that none of the contests were effected on a national securities exchange.
The objective of the Dodd-Frank Act is to subject the sale of security-based swaps to a high level of regulation, and ensure that information about a swap offering is fully transparent to retail investors, the regulator claimed.
Forcerank's "skill-based" app allows players to rank a group of 10 stocks or exchange-traded funds based on anticipated performance over the week ahead.
Players win points based on the accuracy of their predictions, and the those who accrue the most points over a set period win cash prizes.
Forcerank rakes a 10% fee for facilitating the contests, at the same time building a database of information for possible sale.
Forcerank has agreed to pay the fine and shutter its operations.
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