SEC Has Had a Spike in Fraud and Market Abuse Referrals

The US Securities and Exchange Commission has seen a spike in whistleblowing, complaints and referrals and opened a lot of fresh inquiries in the last 10 weeks. The requirement to work remotely has not slowed the operation of the market supervisory practice at the main securities regulator in North America and it would be a solid bet that there will be increased enforcement as a result of this growth in potential misconduct and abuse from this time.

The SEC has had 4000 tips in the period, which is 35 percent more than the same period last year. Steve Peikin, co-director of the SEC’s Enforcement Division, delivered these numbers at a recent virtual conference. “We can’t permit the crisis to be used as a cover for gamesmanship,” Peikin told Reuters.

The SEC created a special committee of leaders from across the agency to identify areas of potential misconduct related to coronavirus. Microcap fraud related to fictional claims about COVID-19, misconduct related to the big market swings, and insider trading based on MNPI are the prime areas for abuse according to Peikin.