Protecting You
- Dishonest Practices
- Ponzi Schemes
- Microcap Fraud
- Pump and Dump Schemes
- Internet Fraud
- Affinity Fraud
Dishonest Practices
The Division of Enforcement frequently brings actions against registered broker-dealers and investment advisers for issues such as undisclosed conflicts of interest, excessive or hidden fees, and inadequate training or supervision of brokers and advisers.
Related Cases:
BB&T to Return More Than $5 Million to Retail Investors and Pay Penalty Relating to Directed Brokerage ArrangementsSEC Charges Two Rob-Advisers With False Disclosures
Ponzi Schemes
In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business.
Related Cases:
SEC Charges Texas Radio Host "The Money Doctor," Halts Ponzi Scheme Targeting Elderly InvestorsSEC Shuts Down $102 Million Ponzi Scheme
Microcap Fraud
Microcap stocks, the thinly-traded stocks of small companies, are frequently at the center of scams targeting retail investors. The owners and promoters of these companies often lure individuals into investing in these companies with promises of huge gains. Instead, the investors lose significant sums when the insiders take the money for themselves.
Related Cases:
SEC Files Charges in Elaborate Microcap FraudSEC Charges Broker-Dealer and Transfer Agent in Microcap Shell Factory Fraud
Pump and Dump Schemes
One common type of microcap fraud is a pump and dump scheme, where fraudsters typically spread false or misleading information to create a buying frenzy that will “pump” up the price of a stock and then “dump” shares of the stock by selling their own shares at the inflated price. Once the fraudsters dump their shares and stop hyping the stock, the stock price typically falls and investors lose money.
Related Cases:
SEC Foils Penny Stock Executive’s Plan to Pump Stock and Exploit InvestorsSEC Charges Microcap Fraudster with Running a Pump-and-Dump Scheme
Internet Fraud
A website, online message, or social media site can reach large numbers with minimum effort. It's easy for fraudsters to make their messages look real and credible and sometimes hard for investors to tell the difference between fact and fiction.
Related Cases:
Online Marketers Charged With Conning Main Street Investors Through Rags-to-Riches InfomercialsSEC Halts Fraudulent Scheme Involving Unregistered ICO
Affinity Fraud
Affinity frauds target members of identifiable groups, such as the elderly, or religious or ethnic communities. The fraudsters involved in affinity scams often are – or pretend to be – members of the group.
Related Cases:
SEC Charges Maine Resident with Defrauding Investors in $3 Million Christian Concert SchemeSEC Shuts Down Fraudulent Advisor Who Was Targeting Members of the Israeli-American Community
IN YOUR BACKYARD
With 11 regional offices, the SEC is committed to protecting investors in every corner of the country.
Modified: July 27, 2021