In a swift action against a Nevada based company for publishing fake claims, SEC has suspended trading of the firm’s securities.
SEC Acts Against a Firm for Making False Claims
The US Securities and Exchanges Commission (SEC), the independent regulator for enforcement of securities laws earlier on Monday suspended trading in securities of a company for publishing false and misleading information.
The regulator issued a press release with the details of the firm and violations on its official website.
The firm had issued statements claiming that it had partnered with an “SEC-qualified” custodian for cryptocurrency transactions. Another announcement regarding the issue of a public offering of preferred stock claimed to be compliant to SEC regulation is also alleged to be false.
Details of the Violation
The trading suspension order issued by SEC refers to two press releases published by Nevada-based American Retail Group, Inc. (OTC: ARGB) in August 2018. According to reports on the internet, the company is a shell firm that acquired Simex, Inc. which operates a cryptocurrency exchange.
In one release the firm claimed that it had partnered with an SEC qualified custodian for use with cryptocurrency transactions that would be “under SEC regulations.” The other one claimed that the firm was conducting a token sale that was “officially registered in accordance [with] SEC requirements.”
On its platform, the firm offers investors its native SIMEX (SMX) tokens.
SEC Advises Caution
SEC on its part has been cautioning investors against such false and misleading claims made by firms to promote their ICOs (Initial Coin Offerings). Earlier this month the regulator had issued an investor alert in this regard.
Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, said:
The SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering.
According to US federal securities laws, the regulator can suspend trading in a stock for 10 days. SEC can also stop broker-dealers from offering to trade in the security until reporting requirements are satisfactorily met.
An Investor Bulletin on initial coin offerings and a mock ICO website have been launched by the SEC’s Office of Investor Education and Advocacy to educate investors.
The SEC increased its surveillance of ICOs over the past year and has been cracking down on those that are found to be flouting the rules.
What more do you think should be done to protect the investors from fraudulent ICOs? Let us know in the comments below.
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