Forcerank, fantasy sports for stocks phone app charged by S.E.C. with illegal offering security based swaps

Forcerank The operator of a mobile phone app that allowed users to make “fantasy stock” picks has been charged with illegally offering security-based swaps.

The Forcerank app is a“fantasy sports for stocks,” offering contestsfor players ranking a group of stocks or exchange traded funds based on expected performance over the upcoming week. But the  U.S. Securities and Exchange Commission says the games violated provisions of the Dodd-Frank financial reforms that were intended to ensure information about a swap offering is fully transparent to retail investors and swaps are limited to platforms subject to the highest level of regulation.

The  SEC rejected Forcerank LLC’s claims that its games were merely a “skill-based contest,” finding the company failed to file a registration statement for what constituted a security-based swap offering and failed to sell its contracts through a regulated exchange.

Forcerank, which cancelled the contests after meeting with SEC staff, agreed to pay $50,000 to settle the charges. Forcerank’s parent company, Estimize, collects and sells data about securities and trading and, according to the SEC, had been hoping to sell data it gleaned from Forcerank to hedge funds and other investors.

Jeffrey Newman represents whistleblowers