SEC Hits Internet Lender for Misleading Investors on Revenue

Loan match-maker BorrowMoney.com Inc. faces 10 counts of securities violations for falsifying revenue and failing to disclose its majority shareholder’s ownership, the Securities and Exchange Commission said.

The internet platform, which connects borrowers to lenders and offers personal finance tools, began publicly trading over the counter in 2019. It reported revenue from selling leads to lenders on prospective borrowers, but the revenue was a lie, according to an SEC complaint filed in the US District Court for the Southern District of Florida.

Founder and CEO Aldo Piscitello, who owns around 90% of the stock, oversaw the falsified reporting and failed to report his stock ownership or changes in it, the complaint said.

“BorrowMoney’s purported revenue was a figment of Piscitello’s imagination and invention,” the SEC said in the Wednesday complaint.

The company in a 2019 securities filing said it had overstated revenue and announced its auditor was resigning. But the filing was misleading to investors because it said the revenue was misstated when it was actually fictitious, the complaint said.

Four unnamed independent audit firms resigned from the company over a five-year span. The first firm was misled by Piscitello and BorrowMoney and resigned in 2019 due to “an inability to rely on evidence” of revenue, according to the complaint. Piscitello paid for 99% of the accounts receivable and didn’t disclose that to the auditor, the SEC said in the complaint.

The second firm resigned two years later, citing “management integrity and qualification of management,” the complaint notes. BorrowMoney doesn’t currently have an independent auditor, the SEC said.

The SEC is seeking to bar Piscitello from serving as an officer or director of any company registered with the SEC, and to prevent him from trading or issuing any more penny stocks.

BorrowMoney’s stock reached a high of $3 in late 2020, but traded around two cents this June.

The volume in stocks trading at less than $1 has soared in recent years. Trading in pink sheets, which are companies not listed on US exchanges for reasons including being too small, ballooned to an average daily volume of 36.7 billion in 2021, an over 400% increase over the prior five years’ average, according to Bloomberg data.

That volume dropped off after 2021, but the appetite for penny stocks remains. Over 530 stocks under $1 were listed on US exchanges in May, and trading in those stocks made up over 24% of all equity trading volume, according to Bloomberg Intelligence.

BorrowMoney couldn’t immediately be reached for comment.

The case is Securities and Exchange Commission v. Borrowmoney.com, Inc. et al, S.D. Fla., Docket No. 0:24-cv-61118, 6/26/24.