TDCI Joins National COVID-19 Enforcement Task Force

Task Force Aims To Disrupt Financial Scams, Fraud Before They Claim Victims
Thursday, April 30, 2020 | 08:53am

NASHVILLE – The Tennessee Department of Commerce and Insurance (TDCI) Securities Division is participating in the North American Securities Administrators Association (NASAA) COVID-19 Enforcement Task Force. Consisting of state and provincial securities regulators, the COVID-19 Enforcement Task Force will identify and stop potential threats to investors stemming from the COVID-19 pandemic.

“The objective of the task force is to proactively identify COVID-19-related threats to investors, including but not limited to fraudulent offerings, investment frauds, and unregistered regulated activities, within the jurisdiction of NASAA member states and provinces, and to disrupt, discourage and deter those activities,” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities.

Modeled after NASAA’s successful Operation Cryptosweep, the new initiative is being led by NASAA’s Enforcement Section and its Enforcement Technology Project Group. The Task Force is using online investigative techniques to identify websites and social media posts that may be offering or promoting fraudulent offerings, investment frauds, and unregistered regulated activities.

“By participating on the task force, Tennessee will have a place at the table when it comes to helping shut down scammers and protect Tennesseans before they fall prey to unscrupulous bad actors during the COVID-19 pandemic,” said TDCI Assistant Commissioner Elizabeth Bowling.

Financial Services Investigations/Enforcement Section Director Michele Stone will represent TDCI on NASAA’s COVID-19 Enforcement Task Force.

“By sharing information among NASAA members about the financial threats to investors during the pandemic, I am confident the task force will help stop individuals who may be using this emergency as an opportunity to better themselves at investors’
expense,” Stone said.

The task force will hold its first meeting this week, said Joseph P. Borg, NASAA Enforcement Section Chair and Director of the Alabama Securities Commission. Individual jurisdictions working as part of the task force will be responsible for taking regulatory action to address identified threats.

As part of its work, the task force will be examining a recent spike in Internet domain names linked to the pandemic. The task force has identified as many as 200,000 coronavirus-related domains as of April 20, 2020. Most of these domain names appear to have been created within the past three months. Through the task force, state and provincial securities regulators will be analyzing these domains to identify those offering securities and/or investment advice, and will pursue those that appear to pose a viable threat to investors.

“Fraudsters are ramping up as a result of this crisis. Some jurisdictions have already taken enforcement actions against illegal investment schemes and we fully expect the task force to uncover many more. Our goal is to get and stay ahead of the curve,” Borg said.

The North American Securities Administrators Association is the membership organization of state, provincial, and territorial securities regulators in North America. NASAA members have been protecting investors from securities fraud for more than 100 years.