SEC Investigates Nevada Company Over False Regulatory Claims


October 22, 2018 11:20 PM

Investors should be wary of any company launching an ICO and claiming SEC endorsement or regulatory compliance.

The US Securities and Exchange Commission (SEC) has ordered a suspension of trading in the securities of Nevada-based American Retail Group Inc. Trading is suspended for ten days from 9:30 am EDT October 22, 2018, through 11:59 pm EDT on November 2, 2018.

In accordance with SEC regulations, because the securities of the American Retail Group (ticker symbol: “ARGB”) are quoted on OTC Link, quoting will not automatically resume when the 10-day suspension ends. As described by the SEC in an investor bulletin on trading suspensions, “OTC markets function through dealer systems where only broker-dealers may quote and facilitate trading in OTC stocks.” Under this system, after the end of a trading suspension, a broker-dealer must be confident that the securities-issuing company’s financial statements are “reasonably current and accurate in all material respects, especially in light of the questions that may have been raised by the SEC suspension action” before publishing a stock quote.

According to the SEC order, American Retail Group Inc. published press releases in August that claimed it had partnered with an “SEC qualified custodian,” and that the token offering was registered “in accordance to SEC requirements” and regulations.

The first press release, published on August 16, told investors that the company was collaborating with Prime Trust and claimed that the financial institution was able to provide them with “SEC qualified custodian and escrow services.”

However, Robert A. Cohen, the chief of the SEC Enforcement Division’s Cyber Unit stated in the commission’s own press release on the matter: “The SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering,”

Just last week, the SEC issued a consumer alert warning investors about false claims related to SEC endorsements.

The second press release in question, which announced American Retail Group’s initial coin offering (ICO), was published on August 22 of this year. The problem the SEC had with this press release is that it specifically stated that the coin offering was “officially registered in accordance [with] SEC requirements.” Although the SEC has proposed rules and regulations concerning ICOs, these rules have yet to become law. 

The SEC has been cracking down on false statements made by businesses operating in the cryptosphere. In September, it announced it was investigating Crypto Asset Management LP (CAM) for claiming it was regulated and registered with the SEC. Earlier this month, the SEC launched an investigation of crypto startup Blockvest LLC for allegedly falsely claiming SEC regulatory approval and illegally using the SEC logo to give credibility to its claims.

Nathan Graham is a full-time staff writer for ETHNews. He lives in Sparks, Nevada, with his wife, Beth, and dog, Kyia. Nathan has a passion for new technology, grant writing, and short stories. He spends his time rafting the American River, playing video games, and writing.

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