SEC Sanctions Lawyers for Acting as Unregistered Broker-Dealers

The SEC is cracking down on unregistered broker-dealers. Generally, an individual or firm must be registered as a broker-dealer with the SEC in order to receive a commission or compensation for selling and/or recommending securities. In order to prevent SEC enforcement action, individuals and firms that have not registered as broker-dealers with the SEC should generally be careful not to receive a commission or compensation for selling and/or recommending securities. On December 7th, 2015, the SEC announced several enforcement actions against lawyers for acting as unregistered broker-dealers. The SEC charged the immigration lawyers in these cases with acting as unregistered broker-dealers that received commissions for selling and recommending EB-5 securities. The U.S. EB-5 Immigrant Investor Program provides EB-5 visas to individuals who invest $1 million in a new commercial enterprise that creates or preserves at least 10 full-time jobs for qualifying U.S. workers.

In all of the cases, the SEC charged the lawyers, who received commissions for selling and/or recommending securities, with violating Section 15(a)(1) of the Securities Exchange Act of 1934 by acting as unregistered broker-dealers. In one of the cases, the SEC ordered the lawyer and his firm to pay disgorgement penalties of $228,750.

To read the SEC press release, please click on the link below: http://www.sec.gov/news/pressrelease/2015-274.html

If you have questions about this Alert, please contact Dan Viola at dviola@sglawyers.com or 212.573.8038.

Cheryl Spratt