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SEC updates list of firms using misleading information to solicit investors

On Behalf of | Jul 5, 2024 | Securities and Compliance

The Securities and Exchange Commission announced last week that it has updated its list of firms that are using misleading or inaccurate information to solicit primarily non-US investors.

The SEC said it is adding 24 soliciting entities, six impersonators of genuine firms, and four bogus regulators to its list of Public Alert: Unregistered Soliciting Entities (PAUSE)  The SEC staff found that they were all providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and recordkeeping requirements.

The PAUSE Program lists firms that falsely claimed to be registered, licensed, and/or located in the United States in their solicitation of investors, as well as entities that impersonate genuine U.S. registered securities firms, or falsely claim to be a regulator, governmental agency, or international organization that do not exist.  Entities on the list have been the subject of investor complaints.  Inclusion on the PAUSE list does not mean the SEC has found violations of U.S. federal securities laws or made a judgment about the merits of any securities being offered.

The SEC said the compilation of the list is aimed at helping investors better inform themselves and avoid becoming victims of fraud.

The PAUSE list is periodically updated by the SEC’s Office of Market Intelligence, in coordination with the Office of Investor Education and Advocacy and the Office of International Affairs.

Here is the SEC’s complete PAUSE list of entities that falsely claim to be registered, licensed, and/or located in the United States in their solicitation of investors.

In its release, the SEC also provided guidance for investors on how to protect themselves: “Be aware that communications — including phone calls, voicemails, text messages, messages via social media, emails, letters, and certificates — may falsely appear to be from official U.S. government sources, including the SEC. If you receive a communication that appears to be from the SEC, do not provide any personal information until you have verified that you are dealing with someone from the SEC and not an impersonator.”

The commission said that the growth of artificial intelligence technology is making it easier for those committing fraud to impersonate government agencies, organizations, and individuals in order to lure investors into scams.

The attorneys at Lewitas Hyman were formerly senior attorneys in the SEC’s Division of Enforcement. We have also represented clients in regulatory matters while working at Morgan Stanley and in private practice at some of the world’s largest law firms. Therefore, we understand the complexities that come with being the subject of a regulatory inquiry, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a free consultation.