SUMMARY: The Securities and Exchange Commission (“SEC” or “Commission”) is

SECURITIES AND EXCHANGE COMMISSION 

[Release Nos. 34-56534 ; IA-2658 ; File No. S7-24-07] 

PUBLIC ALERT:  UNREGISTERED SOLICITING ENTITIES (“PAUSE”) PROGRAM 

AGENCY: Securities and Exchange Commission. 

ACTION: Notice; request for comment. 

SUMMARY: The Securities and Exchange Commission (“SEC” or “Commission”) is 

announcing a new program that will post on its Web site certain factual information about 

unregistered entities that are engaged in the solicitation of securities transactions. 

DATES: Comments should be submitted on or before November 1, 2007.


ADDRESSES: Comments may be submitted by any of the following methods: 

Electronic Comments:

• Use the Commission’s Internet comment form (http://www.sec.gov/rules/other.shtml); or 
• Send an e-mail to [email protected].  Please include File Number S7-24-07 on the 
subject line. 
Paper Comments: 
• Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and 
Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. 
All submissions should refer to File Number S7-24-07. This file number should be 
included on the subject line if e-mail is used.  To help us process and review your 
comments more efficiently, please use only one method. The Commission will post all 
comments on the Commission’s Internet Web site (http://www.sec.gov/rules/other.shtml). 
Comments also are available for public inspection and copying in the Commission’s Public 

Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between 
the hours of 10:00 am and 3:00 pm.  All comments received will be posted without change; we 
do not edit personal identifying information from submissions. You should submit only 
information that you wish to make available publicly. 
FOR FURTHER INFORMATION CONTACT: John Reed Stark, Chief of the Office of 
Internet Enforcement and Counselor to the Director, at (202) 551-4540, Jack Hardy, Branch 
Chief, Office of Investor Education and Advocacy, at (202) 551-6500, Alberto Arevalo, Acting 
Assistant Director, Office of International Affairs, at (202) 551-6690, at the Securities and 
Exchange Commission, 100 F Street, NE, Washington, DC 20549-6628.  
SUPPLEMENTARY INFORMATION:  The Commission today is announcing a new program 
for informing the public about unregistered entities engaged in solicitations of securities 
transactions.  Through this new program, “Public Alert: Unregistered Soliciting Entities” 
(“PAUSE”), the Commission will publish on its Web site certain factual information about 
unregistered soliciting entities that have been the subject of complaints forwarded by investors 
and others, including fellow securities regulators.  By making this information readily available, 
the Commission expects investors to be better able to evaluate solicitations to buy and sell 
securities. Before the program and Web site become operational December 3, 2007, the 
Commission is interested in receiving comments and suggestions on the PAUSE program.    
1. Background 
Generally, entities that solicit purchases or sales of securities for the accounts of other 
persons in the United States are required to register with the SEC.  The Commission regularly 
receives complaints and inquiries from investors and others, including foreign securities 
2


1 
regulators, about solicitations made by entities claiming to be registered, licensed and/or 
operating in the United States, and in some cases, entities soliciting US investors that are not 
registered in the United States.  When an entity claims to be registered with the SEC, it is in 
effect claiming that it has made itself available for SEC regulation and oversight.  For this 
reason, it is important for prospective investors to consider whether a soliciting entity is, in fact, 
registered with the SEC. 
The Commission’s Office of Investor Education and Advocacy (“OIEA”) fields investor 
complaints and inquiries.  The single largest number of investor complaints received by OIEA 
concern solicitations of investors by unregistered entities that appear to be involved in boiler 
room and secondary advance fee schemes.
1
 In 2005 and 2006, OIEA received respectively 1,385 
and 1,418 complaints from investors who were solicited by unregistered entities, many of which 
purported to be US-based securities firms trading in securities of US-based issuers.      
Moreover, perpetrators of boiler rooms and advance fee schemes increasingly use new 
devices to convince investors that their solicitations are legitimate, including:  
Boiler room operations use high-pressure sales tactics generally over the telephone and solicit investors 
with false and/or misleading information.  They frequently purport to be registered broker dealers and/or operating 
in the United States and offer “opportunities” to invest in securities, often issued by companies organized in the 
United States. The schemes are disbanded and the wrongdoers disappear after investors wire their money, which is 
then transferred to offshore accounts. Secondary "advance fee" schemes work very similarly to boiler room 
operations, the difference being that an advance fee scheme generally targets investors who purchased 
underperforming securities, perhaps through an affiliated boiler room, offering to arrange a lucrative sale of those 
securities, but first requiring the payment of an “advance fee” in the form of a commission, regulatory fee or tax, or 
some other incidental expense.  The advance fees are paid, but the promised sale of the securities is never arranged. 
For more information about boiler rooms and advance fee schemes, please see the following discussions on 
our Web site:  
•	The Fleecing of Foreign Investors:  Avoid Getting Burned by "Hot" U.S. Stocks 

(http://www.sec.gov/investor/pubs/fleecing.htm)

•	Worthless Stock: How to Avoid Doubling Your Losses (http://www.sec.gov/investor/pubs/worthless.htm
) 
•	Protect Your Money:  Check Out Brokers and Investment Advisers 

(http://www.sec.gov/investor/brokers.htm
)

3


•	impersonating US registered securities firms by, for example, using the same or a 
similar name or providing an address that closely resembles that of a US registered 
securities firm;  
•	making false reference to, including false claims of endorsement by, governmental 
agencies and international organizations (sometimes even impersonating them); and  
•	claiming endorsements by, or making other reference to, governmental agencies and 
international organizations that sound official, but do not exist.
2 
Our staff is frequently able to determine quickly the accuracy of various claims made by 
the soliciting entities.  For example, a claim by an entity that it is a US registered broker-dealer is 
easily verifiable by checking public sources, including the Central Registration Depository 
database administered by the Financial Industry Regulatory Authority, Inc. (formerly, the 
NASD).
3
  Entities that use names that are the same as, or similar to, the names of US registered 
securities firms can also be verified by checking public sources and obtaining information from 
officials at the firms.  In this way, our staff can also determine whether the complained-of entity 
has any actual affiliation with the registered firm.  A claim that an entity operates from a 
particular location in the United States can also be established.  Finally, if a soliciting entity 
claims that the securities it offers are approved or endorsed by a particular governmental agency, 
that claim can usually also be quickly confirmed.   
In appropriate cases, our staff’s review may lead to a referral to the Division of 
Enforcement, which may begin an investigation of possible securities law violations, and the 
In one case, a soliciting entity impersonated the International Organization of Securities Commissions 
(“IOSCO”). The Securities Investor Protection Corporation (“SIPC”) has also been impersonated by virtue of a 
“look alike” Web site and responded by posting an alert identifying the fictitious organization, the “International 
Brokerage Association.” 
3 
http://www.nasd.com/InvestorInformation/InvestorProtection/ChecktheBackgroundofYourInvestmentProfessional/ 
index.htm 
4

2 

Commission may ultimately bring an enforcement action for such violations.  However, in a 
significant number of cases there may be obstacles to effective enforcement action.  Soliciting 
entities change names frequently, often before law enforcement action can be taken.  Often the 
subjects of complaints purport to be based in the United States, but in fact operate from 
numerous jurisdictions overseas.  Notwithstanding cooperation with foreign counterparts, 
investigations of offshore operations can be complex and time-consuming.  Even if the Division 
of Enforcement’s investigation determines that the entities involved in such activities have 
sufficient contacts with the United States to grant the Commission and US courts with 
jurisdiction over their conduct, there can be substantial obstacles to completing legal action 
against these foreign operators and obtaining meaningful relief, while in the meantime investors 
can suffer significant harm. 
2. The PAUSE Program 
In light of the challenges associated with taking enforcement action against such 
operations, the Commission believes that it is useful to devise a complementary approach that 
serves to empower prospective investors.  The goal of the PAUSE Program is to provide 
prospective investors with relevant information about unregistered soliciting entities before they 
invest. 
To implement the PAUSE Program, the Commission will post on its public Web site 
specific information about unregistered soliciting entities that have been the subject of 
complaints.  For each of these entities, the Commission’s staff will have determined either (1) 
that there is no US registered securities firm with that name, or (2) that there is a US registered 
securities firm with the same (or a similar) name but that solicitations appear to have been made 
by persons not affiliated with the US registered securities firm.   
5


In addition, the PAUSE list will contain a “Comments” section for each entry.  The 
Comments section will reflect certain results of the staff’s investigation addressing the entity’s 
US registration status; any use of a name that is the same or similar to that of a US registered 
securities firm; and any references to governmental agencies and international organizations in 
the solicitations. The “Comments” section may include other relevant information that may be 
helpful to investors, such as the use of addresses that do not appear to exist.   
A second PAUSE list will name fictitious governmental agencies and international 
organizations referred to by complained-of entities.     
3. Additional Information 
The Commission’s intent is to publish factual information that may be valuable to 
investors in connection with their investment decisions.
4
 A listing on the PAUSE web page does 
not mean that the Commission has found violations of US federal securities laws or made a 
judgment about the merits of any securities offered by listed entities.  As well, the PAUSE web 
page will not necessarily include information about all unregistered entities or entities that have 
been the subject of complaints.  There may be various reasons, including law enforcement and 
policy, which may militate against including information about an entity on the PAUSE web 
page. The Commission intends to regularly update the PAUSE lists and archive information 
approximately nine months from the date of last observed activity.   
4. Corrections 
The Commission is committed to providing accurate information under the PAUSE 
Program.  Before listing an entity on PAUSE, the Commission’s staff will notify the entity and 
provide an opportunity – two calendar days from the date of the staff’s notification letter – for 
4
 See, e.g., Securities Exchange Act § 21(a). Cf. Kukatush Mining Corp. v. Securities and Exchange Commission, 
309 F.2d 647 (D.C. Cir. 1962); and Freedom of Information Act, 5 U.S.C. 552. 
6


 the entity to respond. If, after being listed on PAUSE, an entity believes it should be removed 
from a list because information included about it is incorrect, or for other reasons, it should 
notify the Commission’s staff and provide such documents and other information as reasonably 
necessary to support its assertion. 
To notify the Commission of a factual error or to request removal from a list, please write 
to the following address: 
U.S. Securities and Exchange Commission 

Attn: PAUSE Program Administrator 

100 F Street, N.E. 

Washington, DC 20549-5631 

[email protected] 
FAX: 202-772-9278 

Submissions will be reviewed for appropriate action by Commission staff.

* * * * * 
By the Commission. 
         Nancy M. Morris
         Secretary 
Date: September 26, 2007 
7

SECURITIES AND EXCHANGE COMMISSION 


[Release Nos. 34-56534 ; IA-2658 ; File No. S7-24-07] 


PUBLIC ALERT:  UNREGISTERED SOLICITING ENTITIES (“PAUSE”) PROGRAM 


AGENCY: Securities and Exchange Commission. 


ACTION: Notice; request for comment. 


SUMMARY: The Securities and Exchange Commission (“SEC” or “Commission”) is 


announcing a new program that will post on its Web site certain factual information about 


unregistered entities that are engaged in the solicitation of securities transactions. 


DATES: Comments should be submitted on or before November 1, 2007.




ADDRESSES: Comments may be submitted by any of the following methods: 


Electronic Comments:


• Use the Commission’s Internet comment form (http://www.sec.gov/rules/other.shtml); or 

• Send an e-mail to [email protected]. Please include File Number S7-24-07 on the 

subject line. 

Paper Comments: 

• Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and 

Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. 

All submissions should refer to File Number S7-24-07. This file number should be 

included on the subject line if e-mail is used.  To help us process and review your 

comments more efficiently, please use only one method. The Commission will post all 

comments on the Commission’s Internet Web site (http://www.sec.gov/rules/other.shtml). 

Comments also are available for public inspection and copying in the Commission’s Public 



Reference Room, 100 F Street, NE, Washington, DC 20549, on official business days between 

the hours of 10:00 am and 3:00 pm.  All comments received will be posted without change; we 

do not edit personal identifying information from submissions. You should submit only 

information that you wish to make available publicly. 

FOR FURTHER INFORMATION CONTACT:  John Reed Stark, Chief of the Office of 

Internet Enforcement and Counselor to the Director, at (202) 551-4540, Jack Hardy, Branch 

Chief, Office of Investor Education and Advocacy, at (202) 551-6500, Alberto Arevalo, Acting 

Assistant Director, Office of International Affairs, at (202) 551-6690, at the Securities and 

Exchange Commission, 100 F Street, NE, Washington, DC 20549-6628.  

SUPPLEMENTARY INFORMATION:  The Commission today is announcing a new program 

for informing the public about unregistered entities engaged in solicitations of securities 

transactions.  Through this new program, “Public Alert: Unregistered Soliciting Entities” 

(“PAUSE”), the Commission will publish on its Web site certain factual information about 

unregistered soliciting entities that have been the subject of complaints forwarded by investors 

and others, including fellow securities regulators.  By making this information readily available, 

the Commission expects investors to be better able to evaluate solicitations to buy and sell 

securities. Before the program and Web site become operational December 3, 2007, the 

Commission is interested in receiving comments and suggestions on the PAUSE program.    

1. Background 

Generally, entities that solicit purchases or sales of securities for the accounts of other 

persons in the United States are required to register with the SEC.  The Commission regularly 

receives complaints and inquiries from investors and others, including foreign securities 

2




1 

regulators, about solicitations made by entities claiming to be registered, licensed and/or 

operating in the United States, and in some cases, entities soliciting US investors that are not 

registered in the United States.  When an entity claims to be registered with the SEC, it is in 

effect claiming that it has made itself available for SEC regulation and oversight.  For this 

reason, it is important for prospective investors to consider whether a soliciting entity is, in fact, 

registered with the SEC. 

The Commission’s Office of Investor Education and Advocacy (“OIEA”) fields investor 

complaints and inquiries.  The single largest number of investor complaints received by OIEA 

concern solicitations of investors by unregistered entities that appear to be involved in boiler 

room and secondary advance fee schemes.1  In 2005 and 2006, OIEA received respectively 1,385 

and 1,418 complaints from investors who were solicited by unregistered entities, many of which 

purported to be US-based securities firms trading in securities of US-based issuers.      

Moreover, perpetrators of boiler rooms and advance fee schemes increasingly use new 

devices to convince investors that their solicitations are legitimate, including:  

Boiler room operations use high-pressure sales tactics generally over the telephone and solicit investors 
with false and/or misleading information.  They frequently purport to be registered broker dealers and/or operating 
in the United States and offer “opportunities” to invest in securities, often issued by companies organized in the 
United States. The schemes are disbanded and the wrongdoers disappear after investors wire their money, which is 
then transferred to offshore accounts. Secondary "advance fee" schemes work very similarly to boiler room 
operations, the difference being that an advance fee scheme generally targets investors who purchased 
underperforming securities, perhaps through an affiliated boiler room, offering to arrange a lucrative sale of those 
securities, but first requiring the payment of an “advance fee” in the form of a commission, regulatory fee or tax, or 
some other incidental expense.  The advance fees are paid, but the promised sale of the securities is never arranged. 

For more information about boiler rooms and advance fee schemes, please see the following discussions on 
our Web site:  

•	 The Fleecing of Foreign Investors:  Avoid Getting Burned by "Hot" U.S. Stocks 

(http://www.sec.gov/investor/pubs/fleecing.htm)


•	 Worthless Stock: How to Avoid Doubling Your Losses (http://www.sec.gov/investor/pubs/worthless.htm) 
•	 Protect Your Money:  Check Out Brokers and Investment Advisers 


(http://www.sec.gov/investor/brokers.htm)


3




•	 impersonating US registered securities firms by, for example, using the same or a 

similar name or providing an address that closely resembles that of a US registered 

securities firm;  

•	 making false reference to, including false claims of endorsement by, governmental 

agencies and international organizations (sometimes even impersonating them); and  

•	 claiming endorsements by, or making other reference to, governmental agencies and 

international organizations that sound official, but do not exist.2 

Our staff is frequently able to determine quickly the accuracy of various claims made by 

the soliciting entities.  For example, a claim by an entity that it is a US registered broker-dealer is 

easily verifiable by checking public sources, including the Central Registration Depository 

database administered by the Financial Industry Regulatory Authority, Inc. (formerly, the 

NASD).3  Entities that use names that are the same as, or similar to, the names of US registered 

securities firms can also be verified by checking public sources and obtaining information from 

officials at the firms.  In this way, our staff can also determine whether the complained-of entity 

has any actual affiliation with the registered firm.  A claim that an entity operates from a 

particular location in the United States can also be established.  Finally, if a soliciting entity 

claims that the securities it offers are approved or endorsed by a particular governmental agency, 

that claim can usually also be quickly confirmed.   

In appropriate cases, our staff’s review may lead to a referral to the Division of 

Enforcement, which may begin an investigation of possible securities law violations, and the 

In one case, a soliciting entity impersonated the International Organization of Securities Commissions 
(“IOSCO”). The Securities Investor Protection Corporation (“SIPC”) has also been impersonated by virtue of a 
“look alike” Web site and responded by posting an alert identifying the fictitious organization, the “International 
Brokerage Association.” 

3 http://www.nasd.com/InvestorInformation/InvestorProtection/ChecktheBackgroundofYourInvestmentProfessional/ 
index.htm 

4


2 



Commission may ultimately bring an enforcement action for such violations.  However, in a 

significant number of cases there may be obstacles to effective enforcement action.  Soliciting 

entities change names frequently, often before law enforcement action can be taken.  Often the 

subjects of complaints purport to be based in the United States, but in fact operate from 

numerous jurisdictions overseas.  Notwithstanding cooperation with foreign counterparts, 

investigations of offshore operations can be complex and time-consuming.  Even if the Division 

of Enforcement’s investigation determines that the entities involved in such activities have 

sufficient contacts with the United States to grant the Commission and US courts with 

jurisdiction over their conduct, there can be substantial obstacles to completing legal action 

against these foreign operators and obtaining meaningful relief, while in the meantime investors 

can suffer significant harm. 

2. The PAUSE Program 

In light of the challenges associated with taking enforcement action against such 

operations, the Commission believes that it is useful to devise a complementary approach that 

serves to empower prospective investors.  The goal of the PAUSE Program is to provide 

prospective investors with relevant information about unregistered soliciting entities before they 

invest. 

To implement the PAUSE Program, the Commission will post on its public Web site 

specific information about unregistered soliciting entities that have been the subject of 

complaints.  For each of these entities, the Commission’s staff will have determined either (1) 

that there is no US registered securities firm with that name, or (2) that there is a US registered 

securities firm with the same (or a similar) name but that solicitations appear to have been made 

by persons not affiliated with the US registered securities firm.   

5




In addition, the PAUSE list will contain a “Comments” section for each entry.  The 

Comments section will reflect certain results of the staff’s investigation addressing the entity’s 

US registration status; any use of a name that is the same or similar to that of a US registered 

securities firm; and any references to governmental agencies and international organizations in 

the solicitations. The “Comments” section may include other relevant information that may be 

helpful to investors, such as the use of addresses that do not appear to exist.   

A second PAUSE list will name fictitious governmental agencies and international 

organizations referred to by complained-of entities.     

3. Additional Information 

The Commission’s intent is to publish factual information that may be valuable to 

investors in connection with their investment decisions.4 A listing on the PAUSE web page does 

not mean that the Commission has found violations of US federal securities laws or made a 

judgment about the merits of any securities offered by listed entities.  As well, the PAUSE web 

page will not necessarily include information about all unregistered entities or entities that have 

been the subject of complaints.  There may be various reasons, including law enforcement and 

policy, which may militate against including information about an entity on the PAUSE web 

page. The Commission intends to regularly update the PAUSE lists and archive information 

approximately nine months from the date of last observed activity.   

4. Corrections 

The Commission is committed to providing accurate information under the PAUSE 

Program.  Before listing an entity on PAUSE, the Commission’s staff will notify the entity and 

provide an opportunity – two calendar days from the date of the staff’s notification letter – for 

4 See, e.g., Securities Exchange Act § 21(a). Cf. Kukatush Mining Corp. v. Securities and Exchange Commission, 
309 F.2d 647 (D.C. Cir. 1962); and Freedom of Information Act, 5 U.S.C. 552. 

6




 the entity to respond. If, after being listed on PAUSE, an entity believes it should be removed 

from a list because information included about it is incorrect, or for other reasons, it should 

notify the Commission’s staff and provide such documents and other information as reasonably 

necessary to support its assertion. 

To notify the Commission of a factual error or to request removal from a list, please write 

to the following address: 

U.S. Securities and Exchange Commission 

Attn: PAUSE Program Administrator 

100 F Street, N.E. 

Washington, DC 20549-5631 

[email protected] 
FAX: 202-772-9278 


Submissions will be reviewed for appropriate action by Commission staff.


* * * * * 

By the Commission. 

         Nancy  M.  Morris
         Secretary  

Date: September 26, 2007 

7