A B.C. blogger who offered investment advice over Twitter is facing a hearing following allegations he took $15,000 from a single investor to cover personal expenses and engage in high-risk trading.
Noshad Dowlati went by the online alias “Shadow Trader” and offered advice about publicly traded stocks beginning in 2011, according to a July 21 report from the B.C. Securities Commission (BCSC).
In November 2011, Dowlati allegedly agreed to invest $10,000 belonging to a blog follower in exchange for a 7% commission on profits. If the value of the investment fell below $8,000, the so-called Shadow Trader was to return what was left.
But the BCSC has accused Dowlati of using $1,000 of the investment to pay his Visa bill, and go shopping at Starbucks, Shoppers Drug Mart and other retail outlets and restaurants.
He then allegedly used the remaining $9,000 to trade in penny stocks before losing all the investor’s money.
The BCSC said Dowalti never informed the investor the seed money had fallen below $8,000.
In January 2012, Dowalti allegedly took another $5,000 from the same investor on the condition he’d return all $15,000 of the principal within five months.
Instead, the BCSC said the money was used to buy more penny stocks on Dowlati’s sister’s online trading account — an account he was not authorized to use.
Within months, the investor had lost all $15,000, none of which was returned to him.
While the blog, themorningreports.com is no longer active, a cached version shows its authors praising “Great Plays” of the day and posting invitations to read their “beautifully written unbiased blog.”
One blog post zeroed in on a publicly traded pharmaceuticals company.
“I like that it closed over the $8 psychological resistance point,” the post said, “so now it’s a crucial support level, and I think it will be the launching pad for the next leg up towards $10.”
A Twitter account with the same name as Dowalti’s was established in January 2011, links back to themorningreports.com and features a profile picture of a man displaying his abs. It has not been updated since May 20.
When Business in Vancouver dialed a phone number associated with Dowalti, the caller on the other end hesitated for about 10 seconds before speaking and then told the reporter he did not know Dowalti.
The BCSC is scheduled on August 19 to set a date for Dowlati’s hearing, where he faces accusations of fraud and not being registered to trade or offer investment advice.
