Financial firms “must be vigilant in accurately describing the risks of the products they sell….” — Robert Khuzami, SEC Enforcement Chief
In January, 2011, three years after its supposedly safe YieldPlus bond fund plunged in value, Charles Schwab Corp. agreed to pay $119 million to settle a government lawsuit accusing it of “misleading investors about the risks.”
Schwab aggressively marketed its YieldPlus bond fund to retail clients as conservative, but the fund began sinking in early 2008 when its concentration of mortgage bonds collapsed. Attorneys representing Schwab customers have alleged that 250,000 investors lost some $800 million in YieldPlus.
The Charles Schwab settlement, like many others, might not have come about without investor complaints to the SEC.
Record Number of Complaints In 2010
During FY 2010 (ended September 30, 2010), the SEC’s Office of Investor Education and Advocacy (OIEA) handled 87,222 complaints, questions, and other contacts received from investors.
The graph below illustrates the number of complaints, questions and other contacts the SEC received from investors in each of the past seven years.
2010 Complaint Trends
The volume of complaints concerning problems with advance fee fraud ranked first among all complaint categories in FY 2010. OIEA also received a combined total of 1,437 complaints concerning account administration issues (ranking third and fourth on the list).
Below lists the 10 most common complaints the SEC received in
TEN MOST COMMON COMPLAINTS RECEIVED DURING FY 20102010.
| Rank | Complaint Type | FY 2010 Totals |
| 1 | Advance Fee Fraud | 1,217 |
| 2 | Manipulation of Securities/Prices | 788 |
| 3 | Account Administration and Processing (Maintenance Including Account Closing and Redemption Issues) | 777 |
| 4 | Account Administration and Procesing (Matters Relating to Daily Activity in an Account) | 660 |
| 5 | Delivery of Funds/Proceeds | 494 |
| 6 | Misrepresentations and Omissions: Inaccurate, Misleading or Non-Disclosure by Broker-Dealers, Investment Advisers, and
Associated Persons |
444 |
| 7 | Unregistered Security, Salesperson, or Entity | 420 |
| 8 | Specific Market Events/Comments and Complaints | 412 |
| 9 | Ponzi/Pyramid Scheme | 379 |
| 10 | Administative Fees: Excessive or Unnecessary | 328 |
How to File a Complaint
Complaints should be sent to the SEC Complaint Center. The Division of Enforcement and the Office of Investor Education and Assistance created the SEC Complaint Center to make sure that the concerns and problems of individual investors are known throughout the SEC and considered when it takes action.
The SEC encourages investors to contact them because any complaint may be the one that alerts the SEC to a bad broker or firm, an unfair practice in the securities industry that needs to be changed, or the latest Internet fraud.
There are several ways to file a complaint. By going to the SEC website (www.sec.org) you can file a complaint using one of the commission’s online complaint forms. You can also write a letter and mail or fax it to
SEC Complaint Center
450 Fifth Street, NW
Washington, D.C. 20549-0213
Fax: 202-942-9634
You can forward spam (junk email) or copies of message board postings to enforcement@sec.gov.
What to Include in a Complaint
The SEC can best review a complaint if it receives accurate and complete information from you. Though you are not required to furnish any more information than you wish, critical information for the SEC to completely evaluate your complaint includes:
- Your name, mail and email addresses, and telephone numbers.
- The name, mail and email addresses, telephone numbers, and website address of any individual or company you mention in the complaint.
- Specific details of how, why, and when you were defrauded or encountered problems with investments or your broker or adviser.
What Happens after a Complaint is Filed?
The SEC reviews and evaluates each complaint so that it can be referred to the appropriate SEC office.
The Office of Investor Education and Assistance will handle certain general questions about the securities laws and complaints relating to financial professionals or a complainant’s personal financial matters.
SEC professionals can counsel you regarding possible remedies and may, under appropriate circumstances, approach brokerage firms, advisers or other financial professional concerning matters you have raised.
Attorneys in the Division of Enforcement evaluate complaints implicating violations of the federal securities laws. It is the SEC’s policy to conduct its investigations on a confidential basis to preserve the integrity of its investigative process as well as to protect persons against whom unfounded charges may be made or where the SEC determines that enforcement action is not necessary or appropriate.
Subject to the provisions of the Freedom of Information Act, the SEC cannot disclose the existence or non-existence of an investigation and any information gathered unless made a matter of public record in proceedings brought before the SEC or in the courts.
