8 March 2014

TelexFREE Issue Policy On MLM Regulatory Communication, Acknowledge SEC Investigation


Do not invest. This has been proven to be scam! Read this article!!
Telexfree promoters hoping for information on last Wednesday's subpoena summons on the company by the United States Securities and Exchange Commision (SEC) ended up disappointed because company lawyers made it clear Telexfree was not interested in sharing what went down at the parley.

I was stunned few hours ago, when I saw an official statement from Telexfree on logging into my Back Office about its "...Policy Regarding Regulatory Communication". This comes against a backgound of rumors and counter-rumors over the past few months, of an investigation against Telexfree in the USA (also independently confirmed by the Brazilian media outlet, iG,) and elsewhere, for a likely shut-down.

TelexFree Acknowledge SEC Investigation

As noted above, TelexFREE, in an unprecedented move issued a policy statement which practically says it acknowledges that it is under investigation. Below, in the company's own words, is the policy:
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.
This is probably from the desk of the company lawyer, Gerry Nehra, who must have his hands full at the moment, dealing with sector regulators on behalf of TelexFree. This most certainly explains his absence from the “conference” the company held in Spain last weekend.

It is equally interesting to note, as already reported in many quarters, the not-so-subtle shift from Steve Labriola's outright denials of “any investigation” on Telexfree and promising affiliates ‘if there’s something going on we’ll let you know‘, to his recent annoying “no comment” answers.

What does this mean for promoters?

What troubles me most is that the company had consistently denied any investigations existed before (despite the SEC requesting documents from them last year), and when such was confirmed it becomes “...Telexfree has never been the subject of any regulatory enforcement action in any state.” Oh yeah, is that so? Why then the cover-ups?

In the carefully crafted statement above, TelexFree does not reveal anything new. Key to affiliates like me making informed decisions of going forward with the company or not would be the disclosure of exactly what documents the SEC recently requested of them.

Let us be honest to ourselves: the SEC does not call up any MLM company, demand documents be sent to it and order company representatives be on standby for interrogation, unless there is strong and reasonable suspicion of "something amiss" on the part of SEC.

The "late" Zeek Rewards tried to sell a similar 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 not something any affiliate should take standing low. I believe we should all rally together and demand the truth from a company we have so loyally served over the past 1 - 2 years.

We deserve to make informed decisions on our future with the company. We are adults and can decide to leave or stay and risk it out. We deserve to be told the truth no matter how unpalatable it may be. This is our right!

On another note, the draft of the new compensation plan as gotten from several trusted sources, would definitely turn out a nightmare to promoters, if left as it currently is. I pray and hope it is not what will be presented tomorrow at the Telexapp lauch and new compensation plan training.

It would be extremely unfair if Telexfree allows needless and wicked surprises to spring up against promoters who have been faithful to it over the years. A law-abiding company, especially in the MLM sector, nourishes and protects its own. I pray this is and will be the case with TelexFree.

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