Bill to establish Covid-19 Consumer and Investor Fraud Working Group
On September 21, 2020, the House passed the COVID-19 Fraud Prevention Act, H.R. 6735, aimed at protecting consumers and investors from fraud during the COVID-19 crisis. The legislation would create the joint Consumer and Investor Fraud Working Group between two agencies: the Securities and Exchange Commission (SEC) and the Consumer Financial Protection Bureau (CFPB).
Rep. Cynthia Axne (D-IA) authored H.R. 6735 to address the increase in investment scams seeking to exploit consumers and investors during the coronavirus pandemic.
Examples of fraudulent Covid-19 investors schemes identified so far include:
- In June, the SEC froze the assets of five individuals and six offshore entities over a $25 million microcap fraud scheme that involved pumping up companies’ share price through “false and misleading information designed to fraudulently capitalize on the COVID-19 pandemic.”
- In August, the North American Securities Administrators Association’s (NASAA) COVID-19 enforcement task force aimed at combating securities fraud during the pandemic announced its state members had taken more than 200 actions to halt coronavirus scams, including administrative actions, cease-and-desist orders, and investor alerts.
