Man Touted ‘Recession-Proof’ Securities Amid Virus Fears: Texas

A Florida man was served with an emergency cease-and-desist order by Texas officials who claim he was taking advantage of COVID-19 to sell unregistered securities.

James Frederick Walsh, also known as Jim Walsh or "Stormy" Walsh, was served with the order by the Texas State Securities Board earlier this month. Walsh had previously agreed to comply an earlier order to stop selling unregistered securities under his forex investment program, the board said.

"Although Respondent Walsh agreed to comply with the law, he is continuing to illegally and fraudulently offer securities, and he is now threatening immediate and irreparable harm to Texas residents," the order said.

Big Returns Promised

Walsh, of Boca Raton, Fla., placed an advertisement in an "online forum for financial services" that promoted his forex trading program to residents of Houston, the order said.

"The advertisement claims Respondent Walsh achives a winning average of more than 76 percent," the order said. It further claims that "investors receive average monthly returns of between 8 and 11 percent of their net account balances."

Walsh had been referring to the forex program as his "Master Account Client Trading Program," the order said, and that its investments are "basically risk free." Investors were directed to set up accounts with brokers, along with a subaccount under his master account, the order said.

Under this umbrella, the order explained, Walsh promised to trade in a "virtual account" that mirrors the subaccount. Walsh claimed to be paying 60% of account profits to investors, while keeping 40% for his services, the order said. He also charged investors $150 a month to cover the cost of banker charts and other data, the order said.

COVID-19 Angle

Despite agreeing to cease selling securities from the forex program, Walsh actually continued doing business, tailoring his message to capitalize on fears of pandemic-related financial losses, the order said.

"The world is entering a 'bear market' and a recession is right around the corner," the order quoted Walsh warning potential clients, adding that his investment is "recession-proof." Walsh even touted his investment as perfectly suited for senior citizens, the order said.

"Walsh is claiming he is earning greater profits now that COVID-19 has impacted the financial markets and that returns on investments in the (forex program) have tripled their value over the last four weeks," the order said.

Texas officials say neither Walsh or his investment are properly registered, and claim he is guilty of securities fraud and improper and misleading business practices. Walsh has until early May to request a hearing on the allegations, the order said. He could not be reached for comment.

Violation of the Texas Securities Act carries possible punishment of a $10,000 fine and 2-10 years in prison, the order said.

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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