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Regulation and Compliance > Federal Regulation > SEC

SEC Updates List of Fake Firms, Regulators

By Elizabeth Festa

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The Securities and Exchange Commission on Wednesday updated its list of fake firms and regulators in another warning to investors, following a similar alert in August.

Included in the list are eight more bogus regulators, four impersonators or “spoofers” of real firms and 16 soliciting entities.

For example, one Cornerstone Financial Services with an address in New York and Chicago is actually an impersonator of a genuine entity that has the real name based in Indiana, according to the SEC list.

In some cases, as in Global Growth Acquisition Corp., the imposter company gives the same address as the genuine company, which is in the Edgar database with its registration information.

One unregistered solicited entity, Alderbrook Capital Management, gives an address in the Trump Building on 40 Wall Street in Manhattan.

And don’t be fooled by any guidance from the so-called Federal Security Trading Regulatory Board in Lincoln, Nebraska, according to the list. It is one of the fake regulators created online as is the International Financial Market Regulatory Agency.

The U.S. Securities Registration Oversight Commission claims it is a Washington, D.C., regulator that maintains a list of alleged suspended trading firms and alleged administrative proceedings.

These were among the entities added to the so-called PAUSE list. This list identifies entities that have been the subject of investor complaints, known as the Public Alert: Unregistered Soliciting Entities (PAUSE) list. The list is updated periodically.

The new updates to the PAUSE list “are part of the agency’s continuing effort to help investors protect themselves and be better informed when making investment decisions,” stated Jennifer Diamantis, chief of the SEC’s Office of Market Intelligence, in an SEC press release.

The agency did add the caveat that inclusion of a name on these lists doesn’t meant that the SEC has concluded that a violation of the U.S. securities laws has occurred or that the SEC has made any judgment about the merits of the securities being offered by these entities.

However, 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 SEC stated in a release accompanying the new list.

The SEC advised investors to check with the Financial Industry Regulatory Authority’s BrokerCheck, a public registry of its broker-dealer members and their sales personnel.

— Check out SEC’s Clayton: Advice Standards Package Done by September, ‘if Not Sooner’ on ThinkAdvisor.

Elizabeth Festa

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