The SEC’s Division of Enforcement works to protect Main Street investors by bringing cases against those who commit investment fraud. We bring cases involving Ponzi schemes, unregistered offerings, market manipulations, oil and gas scams, fraudulent initial coin offerings (ICOs), and a wide variety of other frauds to help make sure individual investors are protected from those who would steal hard-earned savings, college accounts, and retirement savings.
But there’s a lot you can do to protect yourself. The first step is doing a background check to make sure the person selling you an investment is licensed and registered. Use the free tools available on Investor.gov, the SEC’s website dedicated to informing and protecting investors. Investors should also familiarize themselves with How Fraudsters Target Investors, learn about the free resources available to them in the Self-Defense Toolkit, and check out what the SEC’s regional offices are doing In Your Backyard.
- Dishonest Practices
- Ponzi Schemes
- Microcap Fraud
- Pump and Dump Schemes
- Internet Fraud
- Affinity Fraud
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 Arrangements
SEC Charges Two Rob-Advisers With False Disclosures
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 Investors
SEC Shuts Down $102 Million Ponzi Scheme
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 Fraud
SEC 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 Investors
SEC Charges Microcap Fraudster with Running a Pump-and-Dump Scheme
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 Infomercials
SEC Halts Fraudulent Scheme Involving Unregistered ICO
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 Scheme
SEC Shuts Down Fraudulent Advisor Who Was Targeting Members of the Israeli-American Community
[+]SEC Action Lookup - Individuals (SALI)
With just a name, you can find out if a financial professional has judgments or orders issued against them by the SEC since 2012: SEC Action Lookup - Individuals (SALI)
[+]Investment Adviser Public Disclosure (IAPD)
Search the SEC’s Investment Adviser Public Disclosure (IAPD) website for information about an investment adviser firm’s business operations or an individual investment adviser’s professional background and conduct. IAPD also offers links and information about brokerage firms and their registered representatives derived from FINRA's BrokerCheck system. Learn more here.
[+]Electronic Data Gathering, Analysis and Retrieval (EDGAR)
The EDGAR database provides free public access to corporate information, allowing you to research whether a public company’s securities are registered with the SEC. You also can research information provided by mutual funds (including money market funds), exchange-traded funds (ETFs), and variable annuities. Learn how to use it here.
[+]Red Flags of Fraud
Learn about some of the common tactics that fraudsters use to trick unsuspecting investors and how to avoid them here.
[+]Social Media Protection
Many investors use the internet and social media to help make investment decisions. While these online tools can provide many benefits for investors, these same tools can make users attractive targets for criminals. Learn more here.
If you spot something that looks like a potential fraud, let the SEC know by clicking here.
IN YOUR BACKYARD
With 11 regional offices, the SEC is committed to protecting investors in every corner of the country.
Retail Strategy Task Force
The SEC’s Enforcement Division formed a Retail Strategy Task Force in 2017, concentrating resources and expertise from across the Commission to develop targeted initiatives to identify and address misconduct that most affects retail investors. Here are some recent cases:
- SEC Suspends Trading in Company for Making False Cryptocurrency-Related Claims about SEC Regulation and Registration
- SEC Charges Microcap Fraudsters for Roles in Lucrative Market Manipulation Schemes
- SEC Charges Buffalo Advisory Firm and Principal With Fraud Relating to Association With Barred Adviser
- SEC Temporarily Suspends Trading In Software Company As Part of Coordinated Retail Investor Initiative
Modified: July 27, 2021