Senate Democrats demanded that the Securities and Exchange Commission (SEC) do more to protect investors.
Sens. Carl Levin (D-Mich.), Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.) and Ed Markey (D-Mass.) sent a letter on Tuesday to SEC Chairwoman Mary Jo White, asking her to implement safeguards to protect investors from fraud and abuse in private securities offerings.
{mosads}“We urge you to act promptly to finalize and strengthen investor protections for private securities offerings that you proposed more than one year ago,” the senators wrote. “We are deeply concerned that, for the last year, the Commission has allowed private securities offerings to take place using general solicitation and advertising without adequate investor protections.”
Last year, the SEC issued a rule allowing general solicitation and advertising of certain private securities offerings. Issuers can use highway billboards, Internet ads, telemarketing to seniors and even T-shirts to market securities to investors. The senators said they were concerned that some are being targeted without the knowledge or disclosure of risks.
“A wave of fraudulent schemes could hurt confidence in the integrity of our markets broadly, and unfortunately, today, investors are unnecessarily exposed to undue risks of fraud and financial loss,” the letter stated. “It is vital that prompt action be taken.”
The senators recommended that the SEC require solicitors to disclose any solicitation materials they use to lure investors and to register before being allowed to solicit investors.