SEC Sees Significant Increase in COVID-19 Related Tips and Complaints

The U.S. Securities and Exchange Commission (SEC) noted it has seen a “spike” in tips, complaints and referrals related to COVID-19, prompting brand new investigations for the commission. The agency is specifically focused on fraud relating to the pandemic.

According to the SEC, it has issued more than 30 trading suspensions since early February based on questionable claims related to the coronavirus. The commission has also taken action in “more substantive COVID-related fraud actions,” including charges issued in May to a pair of companies that allegedly committed anti-fraud violations relating to COVID-19. One of these charges was based on inflated claims regarding availability of a finger-prick test for the virus.

Prioritizing COVID-19 cases

Representatives from the SEC said the commission is, in fact, prioritizing SEC cases. If the evidence in tips submitted to the commission is sufficient to bring an enforcement action, the commission may bring such actions immediately even while building the case, a sign that the SEC is taking COVID-related fraud extremely seriously and taking extra steps to put a stop to it as efficiently as possible.

The number of people working from home due to companies shifting to remote work during the pandemic has added some extra challenges to some of these cases. Investigators have to carefully consider the available evidence when work is happening remotely and how that may affect the case at hand.

But in general, regulators have made it a priority to ensure companies are not using the pandemic to engage in fraudulent schemes or financial wrongdoing, especially in the stock market.

For more information about steps you can take to make referrals to the SEC when you have information about potential fraud related to the pandemic, contact an experienced whistleblower lawyer at Kardell Law Group.