a. 12DailyPro was a ponzi scheme, where new investors’ money was the “return” to investors who got into the scheme before later investors. Investors had no idea of how the firm made money, but were only concerned that they made money. It seemed too good to be true, and it was.

b. 12DailyPro violated two main principles: 6. Know what you invest in and who you invest with, and 9. Invest only with high-quality individuals and institutions. This scam violated both of these principles.