Wednesday, May 20, 2015

Hass and Associates Accounting: Fake buyout bid underscores lax system

A fake takeover bid for Avon was filed with the SEC, causing a stir in the market and a sharp rise in Avon's shares. At the same time, it highlights the possibility that the filing system used by Wall Street is not that secure after all.

Thirty minutes before noon last Thursday, a regulatory filing appeared on the website of Securities and Exchange Commission detailing an offer from one PTG Capital Partners to buy Avon for USD 18.75 per share.

The filing caused such a stir that within several minutes, news wire services have reported on it. But when the dust settled down after noon, it turned out that the information stated in the regulatory filing is not accurate, leading some to conclude that it might be a hoax. The supposed British company and its legal representative in the US cannot be reached as well.

Avon has been rumored to be sold for some years now so this surprising filing is not entirely out of the blue. But when Avon finally stated its side, it was to deny that a buyout offer has been made for them.

Eventually, it proved to be a fake buyout bid. Throughout the day though, USD 91 million worth of stocks from Avon has been bought/sold and its stock price increased by almost USD 1.

Now, SEC officials have yet to confirm who made the fraudulent filing and if there was a clear intent at market manipulation. At any rate, concerns about the integrity of the Edgar database -- a system used by companies and financial managers who are involved in public trading to make filings -- are rising.

Apparently, companies make routine filings to the Edgar database -- totaling around 4000 filings every day -- all of which is made public at once. This is why it took some time to verify the offer. Moreover, in a bid to encourage companies to have consistent disclosure, third party filing is allowed in the Edgar system. This means that any insider, stockholder or fraudster could file to Hass and Associates Accounting's cache, for instance, even without credentials to officially file on its behalf.

It is unclear exactly how the agency verifies the filed information. According to SEC, "Under the federal securities laws, filers are responsible for the truthfulness of their filings, and they are subject to enforcement actions when they are false or misleading."

What's more, this does not seem to be the first time that Edgar database has been misused: In 2012, a false bid to buy Rocky Mountain Chocolate Factory was made by a supposed British firm called PST Capital Partners through the Edgar system.

Hass and Associates Accounting noted that an important takeaway from this incident could be the breaking of the belief that being in Edgar is equivalent to a stamp of approval from the SEC.

Tuesday, May 5, 2015

Tips to avoid tax fraud

Reports say tax fraud victims have lost around US$15 million to cybercriminals since 2013.

Fraudsters may come in many forms:

- They can pretend to be an Internal Revenue Service (IRS) agent, who tricked their victims into paying thousands of dollars each through phone calls. Call recipients were threatened to pay up or get charged.

- Some often used malware such as Trojan spyware, banking Trojans or remote access tools (RTAs) to gain access to potential victims’ computers or bank accounts.

- And the brazen ones present themselves as IRS agents and show up in your front door.

Over the years, the attackers’ means may have evolved but their goal remains the same, and that is to deceive victims into giving out their personal information, including Social Security numbers, banking information and other private details.

Tax-related identity theft occurs when attackers uses your stolen Social Security number to file a fraudulent tax return early in the year. You may be unaware that you are already a victim until you try to file your taxes and discover that a return has been filed using your number.

Professionals from Hass and Associates Accounting advise people to keep and protect their Social Security number and other financial information, provide it only when it’s required. Don’t just hand it over because someone asks for it.

Given in the following are examples of tax fraud with tips on how to avoid them.

1. Phone fraud

One example of a phone fraud goes something like this: Someone claims to an IRS agent calls you with bad news. He/she will say that you owe the government unpaid tax money and if you don’t pay immediately over the phone with a credit or debit card; you’ll be audited, arrested or even deported.

If you receive that kind of phone call then it’s a big lie. IRS media spokesperson, Patricia Svarnas said that’s not how IRS does business. They would never ask for your debit or credit card number, and they don’t threaten you with audits, jail time, or deportation.

2. Phishing

Phishing is the fraudulent practice of sending emails claiming to be from reputable agencies or companies like IRS in order to induce individuals to reveal personal information, such as passwords, credit card numbers, and Social Security number, online.

These emails often include a link to a website that looks very similar to an official IRS site. You should not open attachments or click on clicks contained in these messages.

Svarnas said that never respond anything you receive through email. IRS does not initiate contact with taxpayers by email requesting their personal or financial information, including any kind of electronic communication, such as text messages.

3. Tax preparer fraud

Some fraudulent tax preparer who claims to be a tax professional will ask taxpayers to have their refund deposited into the preparer’s checking account.

The IRS advises taxpayers to be very careful when choosing a tax preparer, not someone who recently jumped into the tax filling business to make fast money. If a tax preparer is not associated with a nonprofit or commercial service, make sure they are approved by the IRS.