Here’s an investment banking firm you may never have heard about before. Some investors are sorry they did.
InverWorld Securities, Inc. is headquartered in San Antonio, Texas, best known as the home of the Alamo and the NBA’s World Champion Spurs. Founded in 1987, Inverworld has developed business operations in Mexico and Latin America, opening offices in a number of Mexican cities over the years and developing a clientele of well-heeled customers south of the Texas border. Now it seems, those customers may not Remember the Alamo, but they won’t soon forget InverWorld. In recent days, InverWorld clients have been told that they could no longer make withdrawals from their InverWorld accounts.
The problems first surfaced when about 100 Mexican investors complained that they had been unable to withdraw about $30 million of their own funds from Inverworld. Reportedly, the InverWorld accounts may involve up to 1000 investors and almost $500 million in assets. The SEC is investigating, but in the meantime, Inverworld has apparently shuttered its offices in Monterey, Matamoros and Tampico.
Inverworld’s global strategy presents a particular challenge for regulators. InverWorld's offerings (which included investments in Asia as well as Mexico), it seems, were not generally registered with the SEC, or any other jurisdiction for that matter. Based in the United States, with core of prosperous Latin American clients, InverWorld reportedly invested its customers funds through London, England based firms, including IWG Services, Inc. IWG, which had no employees, acted as an intermediary between InverWorld and I.G. Services, Ltd., a Cayman Islands based company which held the investments of Inverworld’s customers. Apparently both IWG and I.G. are now involved in liquidation proceedings.
The problems at InverWorld might be a mere curiosity if not for Inverworld’s history with regulators. Sure the firm is a member of the NASD and the Securities Industry Association, but its relationship with the Internal Revenue Service has hardly been smooth. In 1996 InverWorld was ordered to pay $380 million in taxes and penalties after the IRS successfully charged that the investment firm had illegally shifted income from the United States to its international operations in order to avoid paying United States taxes.
Considering its affection for Mexico, it comes as no surprise that Inverworld has also been sued by Aerovias de Mexico SA, the parent of the Mexican airline Aeromexico, which accused the investment firm of helping Aeromexico’s former chief executive officer take $37.5 million from the airline. InverWorld has denied the allegations. The case is still pending.
You may want to find out more about InverWorld by logging onto its website. One problem – the site has been under construction since at least September 1998 and contains no useful information about the Company. InverWorld clients will have to look elsewhere for information about their investments. Problem is, where in the InverWorld do they start?
Hartley T. Bernstein is a corporate and securities attorney and civil litigator with a specialty in business transactions and civil litigation. As corporate counsel, Mr. Bernstein has represented both private and public companies in connection with various corporate issues, including governance, mergers/acquisitions, employee compensation agreements and contractual matters. During his career, he has represented companies and broker/dealers with respect to public offerings, private placements of securities, corporate financing transactions and strategic planning.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT editor@stockpatrol.com
InverWorld Securities, Inc. is headquartered in San Antonio, Texas, best known as the home of the Alamo and the NBA’s World Champion Spurs. Founded in 1987, Inverworld has developed business operations in Mexico and Latin America, opening offices in a number of Mexican cities over the years and developing a clientele of well-heeled customers south of the Texas border. Now it seems, those customers may not Remember the Alamo, but they won’t soon forget InverWorld. In recent days, InverWorld clients have been told that they could no longer make withdrawals from their InverWorld accounts.
The problems first surfaced when about 100 Mexican investors complained that they had been unable to withdraw about $30 million of their own funds from Inverworld. Reportedly, the InverWorld accounts may involve up to 1000 investors and almost $500 million in assets. The SEC is investigating, but in the meantime, Inverworld has apparently shuttered its offices in Monterey, Matamoros and Tampico.
Inverworld’s global strategy presents a particular challenge for regulators. InverWorld's offerings (which included investments in Asia as well as Mexico), it seems, were not generally registered with the SEC, or any other jurisdiction for that matter. Based in the United States, with core of prosperous Latin American clients, InverWorld reportedly invested its customers funds through London, England based firms, including IWG Services, Inc. IWG, which had no employees, acted as an intermediary between InverWorld and I.G. Services, Ltd., a Cayman Islands based company which held the investments of Inverworld’s customers. Apparently both IWG and I.G. are now involved in liquidation proceedings.
The problems at InverWorld might be a mere curiosity if not for Inverworld’s history with regulators. Sure the firm is a member of the NASD and the Securities Industry Association, but its relationship with the Internal Revenue Service has hardly been smooth. In 1996 InverWorld was ordered to pay $380 million in taxes and penalties after the IRS successfully charged that the investment firm had illegally shifted income from the United States to its international operations in order to avoid paying United States taxes.
Considering its affection for Mexico, it comes as no surprise that Inverworld has also been sued by Aerovias de Mexico SA, the parent of the Mexican airline Aeromexico, which accused the investment firm of helping Aeromexico’s former chief executive officer take $37.5 million from the airline. InverWorld has denied the allegations. The case is still pending.
You may want to find out more about InverWorld by logging onto its website. One problem – the site has been under construction since at least September 1998 and contains no useful information about the Company. InverWorld clients will have to look elsewhere for information about their investments. Problem is, where in the InverWorld do they start?
Hartley T. Bernstein is a corporate and securities attorney and civil litigator with a specialty in business transactions and civil litigation. As corporate counsel, Mr. Bernstein has represented both private and public companies in connection with various corporate issues, including governance, mergers/acquisitions, employee compensation agreements and contractual matters. During his career, he has represented companies and broker/dealers with respect to public offerings, private placements of securities, corporate financing transactions and strategic planning.
IF YOU HAVE QUESTIONS OR COMMENTS FOR STOCKPATROL.COM, CONTACT US AT editor@stockpatrol.com
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