SEC COVID-19 Enforcement
As COVID-19 stokes demand for life-saving vaccines, treatments, and protections from the virus, corporate con artists are taking advantage of the pandemic. Dishonest companies are raising investor funds by making misleading claims about products that supposedly protect, cure or combat the virus, and misrepresenting the opportunity for quick and dramatic profits.
The SEC is already taking enforcement action against bad actors who lure investors and mislead the public about COVID-19 related investments opportunities.
The Securities and Exchange Commission (SEC) has warned of a “substantial potential for fraud” relating to the fight against COVID-19. The SEC has already brought enforcement actions against 23 companies, and that number will grow as more fraud is uncovered.
Whistleblowers are essential to the SEC’s efforts to stop COVID-19 related securities frauds. The SEC Office of the Whistleblower is authorized to pay monetary awards to whistleblowers whose information leads to an order of sanctions of $1 million or more. Whistleblowers may submit information anonymously through an attorney.
Steven Peiken, the Co-Director of the SEC’s Division of Enforcement, has warned of the explosive growth in COVID-related frauds and highlighted priorities of the SEC in light of the pandemic.
The SEC is inviting the public to attend calls to educate investors about potential schemes, with messages such as this one from Marc P. Berger, Director of the SEC’s New York Regional Office:
“As many of us are focused on supporting our families, friends and neighbors during this difficult time, some fraudsters are seeking to use the COVID-19 crisis as a basis for investment scams,” said Marc P. Berger, Director of the SEC’s New York Regional Office. “We look forward to sharing our insights about how investors can better protect themselves.”
The SEC has halted trading in dozens of stocks in connection with COVID-19 and has brought charges in several alleged coronavirus scams, including allegations of misleading claims, manipulative trading schemes, and other scams. The SEC’s Office of Investor Education and Advocacy and the Division of Enforcement’s Retail Strategy Task Force encourage investors to read the Investor Alert on frauds relating to COVID-19 to learn about the red flags of such schemes.
Ordinary citizens perform a critical public service when they act as whistleblowers to help protect the public from fraud.