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The SEC continues to hit firms with fraud related fines, reminding firms to remain vigilant, ensuing processes, procedures and behaviors are up to scratch to avoid financial and reputational damage.
The SEC has been actively pursuing cases of fraud for some time, bringing to light numerous instances where individuals and firms have engaged in deceptive practices to defraud investors. The latest crop of cases highlight the risks investors face in the market and underscore the need for continued vigilance among investment advisors and broker-dealers.
Latest fraud cases keeping up the pressure
One such case involves Babu Ramaraj, a Virginia engineer accused of defrauding over 70 investors of approximately $31 million through his company, DAB Inspection and Consulting Services LLC. Ramaraj’s alleged activities are yet another example of the scale these activities can reach if gone unchecked.
Additionally, the SEC’s charges against Terraform Labs PTE, Ltd. and Do Kwon for orchestrating a significant fraud scheme involving crypto asset securities. Next up, Joshua Goltry and his investment management firm, JAG Capital Advisors LLC, were charged with defrauding investors of at least $3 million, underscoring the repercussions of misrepresenting investment opportunities and mishandling client funds. Finally, three individuals from New York were charged with raising over $184 million through pre-IPO fraud schemes.
Each of these cases highlight what can go wrong when compliance approaches go unchecked, due diligence doesn’t go far enough and activities go unmonitored, with investment opportunities misrepresented and client funds misused to the tune of millions of dollars.
How to keep your compliance out of hot water
Having strict regulatory standards in place, the framework to monitor activity and building a long-term, ethical culture all work hand-hand-hand in the fight against fraud. With client safeguarding coming into increased focus, SEC scrutiny is only expected to increase.
Areas to review include
- compliance manuals and policies
- codes of ethics
- communications surveillance
- training.
When everyone understands the role they play, no matter where they work in the business, firms can be far more effective and efficient when protecting their clients and reputations, building a sustainable business for the long-term.
How we can help
Our team are adept at navigating the complex regulatory landscape in the US.
We can help you review your current compliance framework considering these new cases and the regulators expectations as you combat fraud.
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