Federal Savings ordered to stop doing business
By Laura Bruce • Bankrate.com

Federal Savings LLC, the company that had a Web site that looked a lot like a bank Web site and sold investment products that looked a lot like CDs but were uninsured, has been ordered to cease and desist.

The Securities Division of Washington State's Department of Financial Institutions accuses the company of running Web sites that make "material misrepresentations regarding the investments based upon vague and misleading information." The agency notes that Federal Savings and its parent company, First Bancshares, give the impression that they're banking institutions, "have significant financial backing, are affiliated with publicly traded financial institutions, have an operating history, and are insured by the Federal Deposit Insurance Corporation."

The agency accuses Federal Savings LLC; First Bancshares, Inc.; JMA Northwest Investments LLC; and Jeremy M. Stamper of violating the registration and anti-fraud provisions of the Securities Act. The order issued by the agency states that neither Federal Savings nor First Bancshares is registered to sell securities in the state; and that Stamper is not registered as a securities salesperson or broker-dealer in the state.

Federal Savings is a Delaware and a Nevada Limited Liability Company with a business address in Seattle.

Federal Savings, as we reported previously, is not a bank and it's not FDIC-insured but puts the words "About FDIC insurance" in a small box in the lower portion of its home page, which could easily lead a casual reader to assume the company is insured by the government agency.

We also noted that the Federal Savings Web site was not secure, even though it asked investors to list personal information on an application.

Federal Savings' Web site says the company stopped accepting applications for fixed-rate certificates as of March 13.

Federal Savings as of March 16, 2007

The company operated Web sites at various times under the following addresses: www.federalsavingssecure.com, and both www.federalsavingsllc.com and www.federalsavingscorp.com -- which are no longer in service.