PAUSE Before You Invest: The SEC Publishes a List of Unregistered Soliciting Entities that Claim to be Registered

By Christopher Pugh, Fall 2015 Intern

Each year the SEC receives complaints from investors and regulatory bodies about solicitations promoting investments that are supposedly endorsed by U.S. governmental agencies or registered with these agencies when they are not. Whether or not a particular investment entity is registered with the SEC is significant because registration means that the investment entity has made itself available for SEC oversight and regulation. Making a false claim of registration with a governmental agency can make a fraudulent scheme seem like a legitimate investment to the unsuspecting investor.

To combat fraud, the SEC is publishing a list of all the unregistered soliciting entities that it has investigated in review of these complaints. The list is called the Public Alert: Unregistered Soliciting Entities or PAUSE. Of course the list does not contain the name of every fraudulent unregistered entity, only the entities the SEC has received complaints about. To use PAUSE, investors should follow the link and use the alphabetical search feature to search for the name of the investment entity they are considering. If the relevant entity’s name appears on the PAUSE list, then that entity is not registered with the SEC, and the SEC has received a complaint concerning this entity.

In an effort to thwart even the diligent investor, some of these fraudulent entities will use the same name as a reputable and registered firm. To combat this, the SEC also publishes a list of Impersonators of Genuine Firms. Of course, if the investor finds the name of the entity they are researching on this list, they must then determine if they are dealing with the real registered firm or the unregistered impersonator.

For more information on how investors can protect themselves from fraud, visit the SEC’s website.