TDCI’S Securities Division Participates in Coordinated International Crackdown on COVID-19

Scams Department Urges Consumers to Learn Red Flags of Scams
Wednesday, August 19, 2020 | 02:15pm

NASHVILLE — The Tennessee Department of Commerce and Insurance (TDCI)’s Securities Division today announced its participation in the COVID-19 Enforcement Task Force, an international investor protection initiative to crack down on schemes related to the ongoing COVID-19 pandemic. The North American Securities Administrators Association (NASAA), of which Tennessee is a member, is coordinating the task force.

As part of this coordinated enforcement effort, TDCI’s Securities Division has looked to identify potential frauds early by actively researching the internet looking for advertisements for investments relating to COVID-19 or a cure for COVID-19 so these can be shut down quickly before TN consumers can be scammed.

With 111 investigators representing 44 jurisdictions in the United States, Canada, and Mexico, the COVID-19 Task Force represents the largest coordinated enforcement initiative undertaken by state and provincial securities regulators. So far, the task force has disrupted more than 200 schemes related to the pandemic.

“Con artists follow the headlines, and it is no surprise that COVID-cons are targeting investors in Tennessee,” said TDCI Commissioner Hodgen Mainda. “Some of these investors may be seeking greater returns while others may have concerns about market volatility. We are putting bad actors on notice that the Tennessee Securities Division is taking swift and effective action to protect investors.”

Many of the schemes detected by the task force incorporate fear and anxiety into their pitches by promoting safe returns independent of the stock market and the economy. Others offer unrealistically and guaranteed high rate of return. Many promoters refer to returns as “passive income” or “cash flow” and promise to pay it on a monthly basis, which may appeal to unemployed retail investors or victims who are or may be negatively impacted by changes in the economy.

Common schemes also often exploit trendy assets such as cryptocurrencies or mysterious programs involving forex trading.

“These types of products may sound appealing, but they also are the types of products unfamiliar to inexperienced retail investors,” TDCI Assistant Commissioner Elizabeth Bowling said.

Consumers can protect themselves from investment fraud by remembering the following tips. For example:

  • Make sure the person offering the investment, and the investment itself, is properly licensed or registered. You can check easily by contacting the Tennessee Securities Division’s Registration Section at 615-741-3187.
  • Don’t fall for claims of guaranteed returns. All investing involves risk, and no one can guarantee a return.
  • Don’t fall for unreasonably high rates of return.
  • If it sounds too good to be true, it probably is.

To report a suspected investment scheme or for more information on how to protect yourself from investment fraud, contact TDCI’s Securities Division at 615-741-5900.