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New SEC program identifies unregistered brokers

The nation's securities police launched a new initiative Tuesday to warn investors against doing business with unregistered brokers, including one using an apparently phony St. Petersburg address.

The U.S. Securities and Exchange Commission pointed a finger at Global Direct Financial Inc. and several dozen other companies, saying they've been the subject of complaints from investors and regulators and are not registered to sell securities.

The SEC said Global listed its address as Suite 110 of the Aura Executive Center at 695 Central Ave., St. Petersburg. However, the center said the company was never a tenant and the building doesn't have a Suite 110. No one answered at Global's telephone numbers, which had New York and South Florida area codes.

The SEC's new program goes by the acronym PAUSE, which stands for Public Alert: Unregistered Soliciting Entities. When a complaint comes in and the SEC verifies the company is not registered to sell securities, the information will be made public on the SEC Web site (sec.gov).

The findings may lead to a more formal investigation and enforcement action by federal or state securities regulators, but that process often takes years. PAUSE provides an early warning system.

"By arming investors with this online resource, we're making it increasingly difficult for swindlers to succeed with their illegal activities," SEC chairman Christopher Cox said.

Putting the information on the Web also makes it accessible to foreign investors solicited by companies claiming to be U.S.-registered brokers.

SEC officials say they receive about 1,400 complaints a year from investors solicited by unregistered companies. It's common for the companies to use false addresses, the SEC said.

Related link


Securities and Exchange Commission: Full list of unregistered companies

New SEC program identifies unregistered brokers 04/15/08 [Last modified: Tuesday, April 15, 2008 11:18pm]

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