Scam

Fund Strategy - 30 Apr 2012

”So have you offered them a job yet?” I asked the chairman of the implausibly-sized investment company Second Coming Asset Management as we enjoyed a pint or two of Depressing If Really True at The First Time Anyone Has Established ­Evidence To Support The Proposition Some Fund Managers Are Skilful.

“As we limp into the most tedious double-dip recession in history, I’m not convinced this is the time to be recruiting anybody,” sighed the chairman. “Oh come on,” I said. “These two seem right up your street.” “OK,” the chairman sighed again. “I’ll bite - who or what are you talking about? More stockpicking monkeys or value-focused pot-plants?

“Or have scientists unearthed the first mollusc with an eye for a profitable social media IPO?” “Sadly not,” I admitted, unwisely pausing for a few seconds to try to visualise how that might actually work. “But this is almost as good - and, believe it or not, they are actually human.” “Human investment prodigies?” said the chairman, looking impressed. “Who would have thought it?”

“I’m not sure I’d go that far,” I said. “There,” snorted the chairman. “I knew it was too good to be true.” “Don’t get me wrong,” I said quickly. “One could argue there was an element of genius in what they did, and it was certainly within an investment context. I just think it might be a bit much to describe them as ’investment prodigies’ - even if they are, as it happens, very young.” (Scam continues below)

“Perhaps you had better start at the beginning,” said the chairman. “I really thought you’d have read about it,” I said. “It is just these twin brothers from Whitley Bay, who are alleged to have defrauded investors of more than $1m with the promise of a surprisingly effective if unsurprisingly fictional stockpicking robot.” “Robert who?” said the chairman.

“Robot,” I corrected him. “It would appear America’s Securities and Exchange Commission has become rather ­agitated by the whole scheme, which it claims was cooked up by these boys five years ago when they were just 16, and involved a couple of websites, a newsletter and a robot that supposedly used algorithms to identify penny stocks that would increase in price. Oh - and the robot was called Marl.”

”Can you imagine the fun I could have had if the computers that existed when I was 16 were not all the size of a house?”

“Not Robert then,” the chairman confirmed. “Definitely Marl,” I replied. “Well, I say ’definitely’ although I’m only telling you what I read in the papers. When I tried to get on to the alleged websites www.doublingstocks.com and the inspired www.daytradingrobot.com - and, yes, I did check to make sure it was not April 1 - I was ’forbidden’ access by the server, which felt like my loss.

“Though obviously not as much of a loss as it was for the 75,000-odd mostly US-based souls who coughed up some $1.2m to subscribe and install a copy of Marl’s software on their own computers. The SEC alleges the tips did not come from Marl or any sort of algorithm but, rather more prosaically, were stocks the twins were paid to push by a stock promoter.”

“Shocking,” said the chairman. “Simply shocking.” “I assume you mean shocking you did not come up with the idea yourself,” I said. “Obviously,” the chairman replied. “These boys sound like a young me - or two young me’s. Can you imagine the fun I could have had if the computers that existed when I was 16 were not all the size of a house?”

“I always understood you had plenty enough fun anyway,” I said. “Still, there is quite an interesting philosophical - though probably not legal - point here about the difference between punters ending up with nothing because they gave their money to these boys and their non-existent computer and punters ending up with nothing because they gave their money to a fund manager with a real computer.”

“I’m not sure we need to start drawing parallels between the questionable if admittedly rather brilliant naughtiness these two young men have got up to and any sort of thing that any sort of chap does in the real and clean world,” said the chairman. “Although, in your day job, am I not right in thinking you run two websites and a newsletter?”

“No robot, though,” I pointed out. “Not even a Robert.”

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