With TelexFree affiliates publishing all sorts of rubbish pertaining to the SEC investigation of the company, it was only a matter of time before the company itself would have to address the regulatory elephant in the room.
Unfortunately those hoping for information on the Wednesday subpoena summons are going to be left disappointed. TelexFree’s lawyers have made it clear the company is not interested in sharing what went down.
In an update recently published to the TelexFree backoffice, the company advises
TelexFREE Policy Regarding Regulatory Communication
As is the case with other leading direct selling companies, TelexFREE has a policy of cooperation with all state agencies.
The activity of direct selling companies is regulated by all states, and many states have MLM distribution registration statutes (including the TelexFREE home state of Massachusetts). As a result, direct selling companies such as TelexFREE are continuously filing documentation and responding to requests for information from state agencies (such as offices of consumer affairs, divisions of securities, or attorneys general).
Such agency informational inquiries are totally different from, and should not be confused with, a regulatory enforcement action.
TelexFREE has always responded to all agency requests for information. However, TelexFREE has never been the subject of any regulatory enforcement action in any state.
In April 2013, TelexFREE responded to requests for information from the Massachusetts Division of Securities. In January 2014, TelexFREE was again asked to provide information and to be available for interview.
In keeping with its policy, TelexFREE has been and will continue to be completely cooperative in furnishing information to all agencies.
TelexFree is a private company, and other than this statement, and as is the confidentiality position of most agencies, TelexFree does not publicly discuss its regulatory filings or interaction.
Very lawyery… and if I had to guess I’d say its from the desk of Gerry Nehra. Dealing with regulators on behalf of TelexFree would certainly explain his absence from the “conference” the company held in Spain last weekend.
Interesting to note is the not-so-subtle shift from Steve Labriola outright denying there was “any investigation” and promising affiliates that ‘if there’s something going on we’ll let you know‘, to “no comment”.
First they denied any investigation existed (despite the SEC requesting documents from them last year), and when that was confirmed it’s become “oh well at least we haven’t had any enforcement action taken against us… that’s something, right?”
In the carefully crafted statement, TelexFree don’t reveal anything new. Key to affiliates making an informed decision going forward with the company would be the disclosure of exactly what documents the SEC recently requested of them.
Oh and let’s not kid ourself, having the SEC call you up and demanding you send them documents and be on standby for an interrogation is certainly not the norm in the MLM industry.
Zeek Rewards tried to sell the same story to their affiliates when information leaked that the North Carolina Attorney General “requested documents” from the company in early August. By the end of the month they were gone.
Evidently attempting to pass off SEC investigations into a company as perfectly normal is becoming somewhat of a calling card for companies Nehra represents.
Meanwhile TelexFree affiliates are running around the internet proclaiming that TelexFree has been “approved” by the SEC:
SEC SAYS NOW IS TOTALLY COOL, A REQUEST FROM THE COMPANY WILL IMITIDO NOTING THAT A DOCUMENT SIGNED, SOON WILL BE PUBLISHED BY THE COMPANY.
The newest and probably the best information dealing with Telexfree today is from the SEC for the USA. Here is the information for you Telexfree Following fokes!
SEC Approval from USA today is Telexfree!
A Google search at the time of publication reveals that the above information has been circulated on no less than sixteen locations on the internet, particularly amongst Portuguese-speaking communities.
As always we’ll continue to keep an eye out for any new developments. Personally I just can’t see how the SEC would not take any action against the running of such a blatant Ponzi scheme for two years.
The new compensation plan meanwhile seems largely unattractive to the investment players, so it’ll be interesting to see how that plays out. I also wonder how TelexFree sold the SEC on the promised keeping of existing ROI payouts to affiliates on all investments made before March 9th?
Maybe it didn’t come up…