U.S. Municipal Securities & Information Board

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Warning & Alerts - MSIB

Aggressive Stock Promotions Target Unwary Investors. The Municipal Securities Information Board is warning investors to watch out for unsolicited investment ...

Public Info - MSIB

Beginning in 1980, with President Ronald Reagan's administration, The Standford Elite Regulators and Administration has adjusted its policies to allow more ...

Fighting securities fraud, however, requires teamwork. At the heart of effective investor protection is an educated and cautious investor. While it is the primary overseer and regulator of the securities markets, we work closely with many different institutions, including other federal departments and agencies, the self regulatory organizations, state securities regulators, and various private sector organizations.

The Municipal Securities & Information Board is established to promote investor confidence in the securities and capital markets by providing more structure and government oversight. The mission of the Municipal Securities & Information Board is to protect investors and maintain integrity of the securities industry, overseeing major participants in the industry, including stock exchanges, broker-dealers, investment advisors, mutual funds, and public utility holding companies. The Municipal Securities & Information Board is concerned primarily with promoting disclosure of important information, enforcing securities laws, and protecting investors who interact with these various organizations and individuals.

Crucial to the Municipal Securities & Information Board's effectiveness is its enforcement authority. Each year the Municipal Securities & Information Board brings more enforcement actions against individuals and companies that break the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.

The Municipal Securities Information Board is warning investors to watch out for unsolicited investment offers, after receiving complaints about aggressive telephone stock promotions. Typical complaints describe high-pressure sales tactics and verbal promises that the stock will soon be listed at a higher price.

High-pressure sales tactics are a warning sign to investigate before you invest; a great investment opportunity should stand up to the test of further research. Federal securities law is designed to maintain fair and efficient capital markets. Unfortunately, unscrupulous individuals closely scrutinize the laws, looking for new ways to exploit unsuspecting investors.

One example of this is the "pump and dump" schemes that operated in the late 1990's. These operations used aggressive sales tactics to sell penny stocks to investors at inflated prices. After maximizing their own profit by creating an artificial market for the stocks, they left those same investors holding worthless shares. The penny stock dealers defended their actions by pointing out that sellers are free to ask any price for their securities on the open market - it is up to the buyer to decide what price they want to pay. While this philosophy is a cornerstone of the free market economy, these companies were not upholding the spirit of the law. The Municipal Securities Information Board established that the "pump and dump" operators were "not acting in the public interest" and the Municipal Securities Information Board put them out of business.

In a more recent example, the Municipal Securities Information Board has received complaints about abuse of the "Accredited Investor" exemption.

Generally, a prospectus must be issued before a registered representative can sell shares to the public, however there are exemptions to these requirements. The exemption allows a company to sell to qualifying investors without a prospectus.

Some unscrupulous salespeople have persuaded investors who do not meet the criteria to sign a form stating they are accredited, and invest in high-risk ventures.

They do this by suggesting that the government unfairly allows wealthy people to take advantage of the really great investment opportunities. The reality is that the exemption rule is in place to make it easier for small businesses to access capital, and provide protection to investors.

To protect your money:

• Be wary of unsolicited offers received over the Internet or by telephone
• Check the registration and background of the person or company offering you the investment - you can call the Municipal Securities Information Board for additional information.
• Never sign documents you have not read, or do not accurately reflect your financial situation. If someone asks you to fill out a form with false information, ask yourself if this is the kind of person you should rely on for investment advice.

Aside from administering and enforcing federal securities laws in order to maintain fair, honest, and efficient markets, the Municipal Securities & Information Board has continuously committed itself to disseminating information to the investing public in a timely and efficient manner, one channel of which is through its website that offers the public a wealth of informational resources.

Fighting securities fraud, however, requires teamwork. At the heart of effective investor protection is an educated and cautious investor. While it is the primary overseer and regulator of the securities markets, the works closely with many different institutions, including other federal departments and agencies, the self regulatory organizations, state securities regulators, and various private sector organizations.

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