As Joe Mont noted earlier this week, federal regulators such as the Federal Reserve and the Federal Deposit Insurance Corporation have already begun to issue storm-related advice for the financial institutions they oversee. The SEC has begun to do so as well, providing a "FAQ Regarding Hurricane Sandy" on Regulation SHO, and announcing a grace period for public registrants that could not submit corporate filings due this week because of Hurricane Sandy.

Today, the SEC also issued an alert to investors to "be on the lookout for investment scams related to Hurricane Sandy." The agency stated that disasters such as hurricanes, floods, and oil spills "often give rise to investment scams. These scams can take many forms, including promoters touting companies purportedly involved in cleanup efforts, trading programs that falsely guarantee high returns, and classic Ponzi schemes where new investors' money is used to pay money promised to earlier investors." 

The SEC provided links to several enforcement actions that it brought against individuals and companies who made false and misleading statements about alleged business opportunities following Hurricane Katrina. Examples include SEC actions against a hurricane restoration company that allegedly lied about non-existent business deals in the wake of Hurricane Katrina, fraudulently inflating the company's stock price; and a water treatment company that allegedly publishing false statements claiming that it was providing filtration equipment and water purifying consulting services to government agencies engaged in Hurricane Katrina relief efforts, when in fact the company had not shipped any products, nor provided any such services.

The SEC added that individuals who receive lump sum insurance payout should be particularly wary of potential investment scams related to Hurricane Sandy.

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