TDCI Joins Nasaa To Provide Update On COVID-19 Enforcement Task Force

Tennesseans Can Protect Themselves By Learning Scammers’ ‘Red Flags’
Wednesday, June 17, 2020 | 10:44am

NASHVILLE – The Tennessee Department of Commerce and Insurance’s (TDCI) Securities Division joins the North American Securities Administrators Association (NASAA) to update the status of the work of the COVID-19 Enforcement Task Force, consisting of state and provincial securities regulators, to identify and stop potential threats to investors stemming from the pandemic.

Currently, more than 100 investigators from 44 jurisdictions including the United States, Canada, and Mexico, are participating in the task force, which formed in April and is led by NASAA’s Enforcement Section and its Enforcement Technology Project Group. Director of the Financial Services Investigation Unit Michele Stone represents TDCI on NASAA’s COVID-19 Enforcement Task Force.

“The task force was established to protect investors by proactively disrupting, discouraging and deterring fraudulent or illegal activities of those seeking to exploit the coronavirus pandemic.” said Christopher W. Gerold, NASAA President and Chief of the New Jersey Bureau of Securities.

To date, state and provincial securities investigators have identified 91 investment-related matters as potentially fraudulent and there are 54 active and open investigations. Individual jurisdictions working as part of the task force are taking regulatory action to address these threats. To date, state and provincial securities regulators have issued 15 cease and desist orders, 8 caution letters, and have made 26 referrals to other regulatory agencies.

“While our team works to identify and stop potential financial threats, Tennesseans can protect themselves by remaining on the lookout for con artists and fraudsters who are using the COVID-19 pandemic to help themselves to consumers’ savings with promises of ‘no risk’ investments and other scams,” said TDCI Assistant Commissioner Elizabeth Bowling. “I urge consumers to contact our team if they have questions about investments or about individuals who may make promises of ‘guaranteed’ paydays or investment returns.”

“I am proud to represent Tennessee on the COVID-19 Enforcement Task Force and share information with other investigators,” said Stone. “By working together across three countries and 44 jurisdictions, I believe we are making progress in protecting investors from the traps and schemes of increasingly sophisticated scammers.”

Joseph P. Borg, Director of the Alabama Securities Commission and chair of NASAA’s Enforcement Section, said investigators are 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. “State and provincial securities regulators are protecting investors by preemptively identifying fraudulent conduct that could cause investor losses,” Borg said.

“By deploying various open source intelligence technologies, electronic collaboration tools as well as novel web crawling and scraping approaches, we have been able to provide intelligence and resources to investigators to help them conduct online investigations, as well as share and aggregate information about this international enforcement initiative,” said Jake van der Laan, Director of Information Technology & Regulatory Informatics, with the New Brunswick Financial & Consumer Services Commission and chair of NASAA’s Enforcement Technology Project Group.

Task force investigators have uncovered a variety of investment-related schemes, many involving cryptocurrencies or promoting private offerings outside of the stock market, said Joe Rotunda, Director of Enforcement for the Texas State Securities Board and vice chair of NASAA’s Enforcement Section. Other investment opportunities include oil and gas ventures, real estate, penny stocks, precious metals, and investments in the foreign exchange markets. “Based on the pitches investigators have seen, suspects appear to be targeting seniors and individuals with portfolios that are losing or have lost value due to current economic conditions,” Rotunda said.

Examples of recent task force enforcement investigations include:

A promoter targeting retirees and investors who need supplemental income “due to crash in the economy,” touting his ability to capitalize on volatility in the markets to make lucrative guaranteed returns.

An advertisement posted on Craigslist that encourages prospective clients to “exploit the current coronavirus crises by trading penny stocks from the pharmaceutical and biotechnology industry whose stocks are experiencing significant price fluctuations due to the pandemic.”

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.