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Thursday, March 20, 2014


Investor Alert: Beware of False Claims of SEC Registration

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors about potentially fraudulent investment schemes that involve individuals or firms misrepresenting that they are registered with the SEC. Investors should be careful to check the background, including license and registration status, of any person who tries to sell them an investment product or service, and should avoid investing with anyone who falsely represents that they are registered with the SEC.

Fraudsters may try to lure you into investing with them by falsely claiming to be registered with the SEC. In a recent fraud case brought by the SEC, SEC v Fleet Mutual Wealth, the defendants allegedly promised investors guaranteed returns of 2-3% per week through the use of a high frequency trading strategy, but instead used investors’ money to operate a pyramid scheme. The defendants allegedly recruited investors by misrepresenting that their firm was “registered” or “duly registered” with the SEC and pointing to the firm’s Form D filings to support this misrepresentation.

A Form D filing has nothing to do with whether an individual or firm is registered with the SEC.

Registration of Individuals and Firms

Many sellers of investment products or services are either brokers, investment advisers, or both. Most brokers must register with the SEC and join the Financial Industry Regulatory Authority (FINRA). Investment advisers that provide investment advice to retail investors generally must register with the SEC or the state securities regulator where they have their principal place of business.
The fact that an individual or firm has made a filing with the SEC does not mean that the individual or firm is registered with the SEC. If an individual or firm offering you an investment product or service claims to be registered with the SEC, verify that this is true:

Determine whether a firm is registered with the SEC as a broker and whether key individuals are duly licensed, and check whether there is a history of investor complaints or problems with regulators, by using FINRA’s BrokerCheck or by calling the FINRA BrokerCheck Hotline at (800) 289-9999.

Determine whether a firm’s registration with the SEC as an investment adviser is active and whether any required licenses of individuals are current, and review disciplinary history by searching the SEC’s Investment Adviser Public Disclosure (IAPD) database:

To check a firm, select the SEC Registration Status hyperlink.
To check an individual, review the Qualifications section of an Investment Adviser Representative Report Summary.

In addition, always contact your state securities regulator to determine whether an individual or firm is licensed or registered with your state securities regulator to do business with you, and ask about any complaints. Find contact information for your state securities regulator by visiting the North American Securities Administrators Association (NASAA)’s website or by calling NASAA at (202) 737-0900.

Registration of Securities Offerings and Form D

Under the federal securities laws, a company or private fund may not offer or sell securities unless the transaction has been registered with the SEC or an exemption from registration applies. Companies and private funds that offer and sell securities in reliance on certain exemptions from registration are required to file a brief notice known as Form D. Form D filings are publicly available in the EDGAR database.

Form D requires basic information about the issuer of the securities and the unregistered securities offering, such as information about the issuer’s executive officers, the size of the offering, and the date of first sale. The SEC does not verify the accuracy of the information in a Form D filing, and a Form D filing cannot be used to accomplish registration of individuals or firms with the SEC, or registration of securities offerings with the SEC.