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FINRA Notice 21-03: Low-Priced Securities Fraud

Posted on March 15, 2021March 15, 2021 by admin

FINRA released regulatory notice 21-03, FINRA Urges Firms to Review Their Policies and Procedures Relating to Red Flags of Potential Securities Fraud Involving Low-Priced Securities, discussing issues with these securities offerings and fraud. Specifically, including those involving COVID-19 and cannabis related businesses, which appear to have been part of potential pump-and-dump or market manipulation schemes that target unsuspecting investors.

In the notice, FINRA states that “Low-priced securities tend to be volatile and trade in low volumes. It may be difficult to find accurate information about them. There is a long history of bad actors exploiting these features to engage in fraudulent manipulations of low-priced securities. Frequently, these actors take advantage of trends and major events — such as the growth in cannabis-related businesses or the ongoing COVID-19 pandemic — to perpetrate the fraud.”

Compliance Surveillance Trends During COVID-19

Posted on June 11, 2020 by SCM Communications

The messages are clear. Sales practice concerns, fraud, and operational issues related to the COVID-19 pandemic have arrived. Compliance professionals who are responsible for the surveillance and review of targeted areas of the compliance program should understand what may be coming down the pipe and ensure that their programs are sufficiently flexible to identify potential red flags.

The Senior Safe Act: “Immunity” with Conditions

Posted on July 22, 2019September 13, 2019 by SCM Communications

On May 23, 2019, the SEC, NASAA, and FINRA published a year-end review of the Senior Safe Act which became federal law one year ago. In doing so, they also issued a Fact Sheet to help raise awareness with financial institutions and describe how the Act’s immunity provisions work.

Imposter Websites Reported by Member Firms

Posted on May 14, 2019May 14, 2019 by SCM Communications

FINRA has recently received notice from several FINRA member firms indicating that they have been victims of imposter websites designed to mimic their actual websites with the end goal of committing financial fraud.

What is an Initial Coin Offering (ICO)? – Part II

Posted on September 6, 2018 by SCM Communications

[Continued from What is an Initial Coin Offering (ICO)? – Part I]

Online Platforms that Facilitate Trading in ICO Tokens are Not Registered Exchanges

There are no ICO platforms currently registered as exchanges. Further, the SEC has stated that it neither regulates these platforms as exchanges nor reviews the digital assets that may be listed or traded on these platforms. Many fraudulent platforms refer to themselves as exchanges to provide a sense of legitimacy and make investors assume they are regulated entities or meet the regulatory requirements and standards of a national securities exchange.

What is an Initial Coin Offering (ICO)? – Part I

Posted on September 6, 2018October 23, 2018 by SCM Communications

Digital assets such as cryptocurrencies, as well as other crypto coins and tokens, may be offered to investors in the form of an Initial Coin Offering (ICO). But what is an ICO? And why are they such a regulatory hot topic in the securities industry currently?