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SEC launches Web-based program to warn investors about questionable securities solicitations


Date: Thursday, September 27, 2007
Author: James Langton, Investment Executive

Regulator seeking public comment

The U.S. Securities and Exchange Commission today announced a new Internet-based initiative to alert investors worldwide about problems with certain unregistered entities engaged in solicitations of securities transactions.

Through its “Public Alert: Unregistered Soliciting Entities” (PAUSE) program, the commission will publish on its Web site certain factual information about unregistered soliciting entities that have been the subject of complaints forwarded by investors and others around the globe, including foreign securities regulators. The commission is seeking public comments on the PAUSE program before it begins.

The SEC says that by sharing information received in complaints about particular unregistered soliciting entities earlier, it is aiming to give retail investors a new tool to help them avoid questionable investment solicitations, including solicitations from online boiler room and advance fee scheme operations.

“Ferreting out operators of boiler rooms and secondary advance fee schemes that prey on innocent investors is a priority of this commission,” said SEC chairman Christopher Cox in a news release. “The PAUSE program is designed to proactively attack this problem, using the Internet to fight back by arming investors with information in real time to help them ask tough questions before giving their hard-earned money to strangers. This encourages all investors to PAUSE and determine whether an entity is properly registered with the SEC or located in the United States as claimed. We look forward to hearing the public’s views about this important initiative.”

To implement the PAUSE initiative, the commission will post on its public Web site specific information about unregistered soliciting entities that have been the subject of complaints. For each of these entities, the commission’s staff will have 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, but that solicitations appear to have been made by people not affiliated with the U.S. registered securities firm. A second PAUSE list will name fictitious government agencies and international organizations referred to by entities that are subjects of complaints.