Regulatory Enforcement

An active, risk-taking business can create dissatisfied clients or partners that might lodge complaints with regulators. If you broker trades of securities or commodities on behalf of clients, provide financial advice on the trading of stocks, or solicit investments in a business, you’ll be subject to restrictive fraud protections and due diligence requirements by regulatory authorities like the U.S. Securities and Exchange Commission (“SEC”), the Financial Industry Regulatory Authority (“FINRA”), and the Commodity Futures Trading Commission (“CFTC”). Additionally, in New York, the General Business Law’s “Martin Act” carries civil and criminal penalties for fraud related to the offering and sale of securities. If one of these bodies accuses you or your business of misconduct, the penalties can be severe and long-lasting.

Learn more about the SEC’s investigations.

What Is a Security?

Any investment of money in a common enterprise with a reasonable expectation of profits based upon the entrepreneurial/managerial efforts of others.

What Is a Commodity?

Any fungible (not unique) good subject to a forward-looking or “future delivery” promise to buy or sell at a set price.

What About Cryptocurrency?

Under the CFTC’s regulations and interpretation, Bitcoin, Ethereum, and other cryptocurrencies are considered to be commodities.

Considering an Investment?

• Check to see if they’re registered with FINRA.
• Look up whether the SEC took action against a company/individual previously.
• Make sure any commodity trader is registered with the CFTC.