SEC Updates Warning List, Adds 29 Unauthorized Firms

The Securities and Exchange Commission (SEC) updated its warning list and added 29 unregistered firms that are primarily soliciting non-US investors earlier this week. Out of the 29 companies, 16 are soliciting entities, four are clone firms, and nine are bogus regulators.

In the US, financial firms that seek investors in the country to use their services are generally required to register with the SEC. To obtain a registration, companies must meet the minimal financial standards and disclosure, reporting and recordkeeping requirements.

The new additions have found their way onto the US regulator’s blacklist, otherwise known as PAUSE (Public Alert: Unregistered Soliciting Entities), as it found the firms did not meet these standards. Specifically, the watchdog found that the firms were providing inaccurate or misleading information about their location, registration or affiliation. With too many to name, you can see the list of unregulated firms here.

However, the list doesn’t only display firms claiming to be registered, when they, in fact, are not. It also includes Clone firms, which are companies that attempt to trick investors into thinking they are another company, which is often registered and credible. To achieve this, they often have similar names, addresses, and website URLs. The list also highlights bogus “regulators.” These are firms that falsely claim to be government agencies or Affiliates .

The updates to the list are part of the US regulator's efforts to protect retail investors from scams and unauthorized firms. The changes were made by the SEC’s Division of Enforcement’s Office of Market Intelligence. The SEC’s Office of Investor Education and Advocacy and the Office of International Affairs also helped coordinate the updates.

SEC registration does not completely protect investors

Jennifer Diamantis, Associate Director, SEC Division of Enforcement, Market Intelligence and Analytics — Jennifer Diamantis
Source: LinkedIn

Commenting on the list, Jennifer Diamantis, Chief of the SEC’s Office of Market Intelligence said: “while SEC registration is no guarantee against fraud or mismanagement, it does bring a higher level of security and accountability to protect the public. Investors should proceed with caution if any unregistered entity attempts to solicit them.”

If a company is on the blacklist, it means the watchdog has flagged its operations as suspicious. It does not indicate that the companies have violated any US laws.

SEC registration does not completely protect investors

If a company is on the blacklist, it means the watchdog has flagged its operations as suspicious. It does not indicate that the companies have violated any US laws.