MADISON, Wis. – The Wisconsin Department of Financial Institutions said it is participating in the COVID-19 Enforcement Task Force, an international investor protection initiative to crackdown on investment schemes related to the ongoing COVID-19 pandemic.
The North American Securities Administrators Association (NASAA), of which DFI is a member, is coordinating the task force.
The DFI reported that as part of this coordinated enforcement effort it reviewed more than 100 domain names related to COVID-19 that targeted Wisconsin investors, opened three investigations, and issued one cease and desist order.
With 111 investigators representing 44 jurisdictions in the United States, Canada, and Mexico, the COVID-19 Enforcement Task Force represents the largest coordinated enforcement initiative undertaken by state and provincial securities regulators, the DFI reported. So far, the task force has disrupted more than 200 schemes related to the pandemic.
Following the Headlines
“Con artists follow the headlines and it is no surprise that COVID-19 cons are targeting investors in Wisconsin,” DFI Secretary Kathy Blumenfeld said in a statement. “Some of these investors are just seeking greater returns while others may have lost a job and are worried about market volatility and making ends meet. By participating in this task force, we are putting criminals on notice that DFI is taking swift and effective action to protect investors.”
According to the report, many of the schemes detected by the task force incorporate fear and anxiety into their pitches by promoting safe returns independent of the stock market and the economy. Others offer unrealistic and guaranteed high rates of return. Many promoters refer to returns as “passive income” or “cash flow” and promise to pay it on a monthly basis, which may appeal to unemployed retail investors or victims who are or may be negatively impacted by changes in the economy, the DFI said.
The DFI noted common schemes also often exploit trendy assets such as cryptocurrencies or mysterious programs involving forex trading.
“These types of products may sound appealing, but they also are the types of products unfamiliar to inexperienced retail investors,” Blumenfeld said.
Steps Consumers Can Take
The DFI is urging people to take several steps to protect themselves, including:
- Make sure the person offering the investment, and the investment itself, are both properly licensed and registered.
- Don’t fall for claims of guaranteed returns or unreasonably high rates of return because all investing involves risk, and no one can guarantee a return.
- Don’t be afraid to walk away if there a sense of urgency, limited availability, or lack of detailed information regarding an investment offering.