By: Alexandra Hughes, Fall 2015 Student Intern
Is that document really from the Securities and Exchange Commission? Maybe. Maybe Not. According to an Updated Investor Alert from the SEC, impersonators are using “bogus subpoenas” to demand money for “fictitious securities laws violations.”
Although the documents look like official documents of the SEC, the Updated Investor Alert emphasizes that the “SEC does not seek money from any person or entity as a penalty or disgorgement for alleged wrongdoing outside of its formal Enforcement process.” The Enforcement process begins with an investigation of the alleged securities law violations, recommending the Commission bring civil action in federal court or within the SEC before an administrative law judge, and then prosecuting the case on behalf of the commission. In this Enforcement process, the SEC only seeks money once the person is found liable by a finder of fact for the violation and has an opportunity to contest the violations or has an opportunity to settle the case.
Thus, if you are sent an official looking document from the SEC demanding money where there has been no commencement of a proceeding in federal court or before an administrative judge, or where there has been no opportunity to defend against the charges, you are probably dealing with a government impersonator. Similarly, you are likely dealing with a government impersonator if you are contacted by phone or email by an individual claiming to be an SEC employee about:
- assistance with a fund transfer
- investment offers
- ownership of certain securities
- eligibility to receive disbursements from an investor claims fund or class action settlement, or
- grants or other financial assistance.
The Updated Investor Alert emphasized that the SEC does not make unsolicited communications or “endorse investment offers, assist in the purchase or sale of securities, or participate in money transfers.”
If you are unsure if you are dealing with a government impersonator, the SEC recommends verifying the person’s identity by calling (202) 551-6000, SEC’s personnel locator, or by calling (800) SEC-0330, SEC’s general information line. The SEC also provides an online Question Form. Further, the Updated Investor Alert includes a link to the list of international securities regulators and directory of state and provincial regulators.