US Securities Law – SEC Launches New Offensive to Alert Investors about Phony Investment Solicitations

Washington, D.C., April 15, 2008 (Lawfuel) – The Securities and Exchange Commission today announced the launch of its latest offensive targeting online boiler rooms, cold calls, and other potentially fraudulent financial solicitations circulating to unsuspecting investors. Such solicitations often use phony claims of SEC registration, false U.S. addresses, or endorsements from make-believe government agencies or international organizations to make their investment opportunities appear more credible. Some also falsely claim to be affiliated with established brokerage firms.

The SEC’s initiative is called “PAUSE” for Public Alert: Unregistered Soliciting Entities. The SEC is providing investors with factual information that the agency has received from investor complaints and other sources, including foreign regulators, about questionable e-mail or phone solicitations involving stock or securities sales.

Receiving this information in real-time can help investors proactively detect suspicious solicitations and determine whether an entity exists as advertised, before investing their money. The SEC’s PAUSE Web pages are initially listing 56 unregistered soliciting entities and affiliated phony agencies or organizations that investors should beware. The lists will be updated regularly based on information received by SEC staff.

“Anyone thinking about investing online needs this in their tool kit,” said SEC Chairman Christopher Cox. “PAUSE is a great resource for investors looking to steer clear of the latest phony investment offers that permeate the Internet. It’s designed to make it easier for investors to figure out whether an investment solicitation is legitimate by quickly seeing whether the person making the offer is SEC-registered, has a valid U.S. address, and is affiliated with an authentic U.S. brokerage. Too many “investments” that are too good to be true flunk these basic tests. By arming investors with this online resource, we’re making it increasingly difficult for swindlers to succeed with their illegal activities.”

John Reed Stark, Chief of the SEC’s Office of Internet Enforcement, added, “PAUSE is a good summary of the program’s message. Rather than succumb to high-pressure sales tactics, investors should take a moment to consider whether the promises being made are too good to be true. They should approach financial solicitations with the same degree of care and reflection with which they consider any important life decision.”

The benefits of the PAUSE program go not just to U.S. investors, but to the rest of the world as well. Since the SEC receives a large volume of complaints and inquiries from foreign investors about solicitations that purport to be made from legitimate U.S.-registered broker-dealers, the PAUSE program will have a beneficial impact around the globe.

Detective Chief Superintendent Steve Wilmott, head of the Economic Crime Department at the City of London Police, said, “The City of London Police appreciates this initiative by the U.S. SEC in establishing an early warning system to help investors identify possible boiler room and advance fee schemes. The City of London Police is responsible for coordinating Operation Archway, the UK’s national intelligence reporting system for boiler room fraud, and for pooling resources from the Financial Services Authority, the Serious Fraud Office, the Serious Organised Crime Agency and other authorities to identify, investigate and prosecute these schemes. These schemes, which often purport to be legitimate entities located in the U.S., have been mercilessly targeting UK investors, particularly our vulnerable senior citizens, with assurances about bogus opportunities to invest in the U.S. market. This is a growing international problem that will take a combination of creative initiatives like PAUSE, as well as good old-fashioned international cooperation among regulatory and law enforcement authorities to protect investors from these callous financial crimes.”

Investors can use information provided by PAUSE and similar Web sites maintained by overseas regulators like the U.K. Financial Services Authority ( and the Australian Securities and Investments Commission (

For each soliciting entity on the PAUSE Web pages, the SEC’s staff has determined either that there is no U.S.-registered securities firm with that name, or that there is a U.S. registered securities firm with the same or similar name and solicitations appear to have been made by people not affiliated with that firm.

The PAUSE Web pages also include links to information bulletins from the SEC’s Office of Investor Education and Advocacy describing common tactics of boiler-room solicitors, such as falsely offering to purchase low-value shares at an above-market price upon payment of specious “advance fees.”

Scroll to Top