By Brad Rosen, J.D.
The SEC’s Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force issued an alert to educate and inform Main Street investors about current investment frauds, including those scams related to the Coronavirus (COVID-19) pandemic. In the alert, the SEC noted how fraudulent actors often exploit national crises and periods of uncertainty to lure investors into various scams. These scam artists frequently play off investors’ hopes and fears, as well as their charity and kindness, in attempts to exploit confusion or rumors in the marketplace.
Enforcement remains on the beat. Despite the prevalence of social distancing measures and work-at-home mandates, the alert makes it clear the SEC’s Division of Enforcement continues to execute on its mission of protecting investors and remains fully operational during this time of crisis. Specifically, the alert advises that that SEC continues to actively monitor the markets for frauds, illicit schemes and other misconduct affecting U.S. investors relating to COVID-19. Moreover, as circumstances warrant, the agency is prepared to issue trading suspensions and use tools in its enforcement arsenal as appropriate.
Keep the guard up. The alert also advises investors not to let their guard down when it comes to spotting fraudulent investment schemes, including those masquerading as charities or targeting certain affinity groups. Additionally, the alert urges people to exercise good investment hygiene such as verifying that the seller is currently registered or licensed by using search tools available on Investor.gov. As always, potential investors should be on the lookout for promises of guaranteed high investment returns and be wary of unsolicited investment offers.
If you see something, say something. The alert also urges members of the public to report possible securities fraud or nefarious activity to the SEC. Potential fraud can be reported to the SEC by completing a complaint form at the SEC’s online tip, complaint, and referral (TCR) system.