The Securities and Exchange Commission (SEC) has formed the Interagency Securities Council (ISC) with the participation of federal, state, and local regulatory and law enforcement agencies. The council seeks to tackle the growing sophistication of securities and crypto fraud by enhancing collaboration and information exchange among different organizations.
SEC Creates Task Force to Fight Fraud
The ISC will convene on a quarterly basis, with participants from over 100 departments and agencies, including federal, state including state attorneys general, state police, and local law enforcement. The focus is on the identification of new and current trends in scams, frauds, and the most suitable measures for preventing them.
Gurbir S. Grewal, Chair of the ISC and Director of the SEC’s Division of Enforcement, underlined that this initiative is crucial as it helps investigators stay up to date with emerging threats to communities related to securities fraud. According to the report, the SEC’s work on the ISC will be led by Adam Anicich and Manuel Vazquez.
Cristina Martin Firvida of the SEC’s Investor Advocate noted that this coordinated action helps investors because it shows that all levels of government can and should work together to share information to enhance investor protection.
The ISC is intended to facilitate communication and exchange of information with other law enforcement agencies that may not regularly encounter securities law violations, including local police departments and sheriff’s offices.
Focus on Crypto Asset Scams
The formation of the ISC comes in the wake of the SEC’s investor alert in May this year, where the SEC warned the public about the rising cases of fraudsters using cryptocurrency securities to rip off investors. Such scams have evolved over time due to the increased adoption of digital currencies, and fraudsters are using various tricks to deceive investors.
According to the SEC advisory, the fraudsters may reach the victims through social media or direct messages and pose as people who have investment tips or know the victim.
Similarly, these scammers often spend some time building a rapport with their victims before asking them to invest in fake securities projects and then disappearing with the money.
These criminals have been seen employing sophisticated methods including the use of Artificial Intelligence (AI). They set up fake websites and use deepfake technology to produce realistic audio and video messages of celebrities or politicians supporting the fake schemes. The SEC also pointed out that pump-and-dump schemes are becoming more rampant especially in low-quality or speculative coins, including memecoins whereby investors end up losing a lot of money.
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