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While much discussion lately is focused on the SEC’s changing stance – to govern by rule and less by enforcement, there’s still plenty of evidence to demonstrate that firms’ shouldn’t be taking their foot off the pedal when it comes to compliance oversight.
While it is true that under new leadership, the SEC has signaled a shift back toward more traditional, clear‑cut fraud cases and away from novel or highly technical theories without investor harm, enforcement staff have emphasized they’ll concentrate on cases that involve actual harm to investors – especially retail investors – rather than exam deficiencies or violations that lack fraud or investor harm.
A number of fraud cases in the past 5 months
1. Founder & Owner of Washington-Based Water Machine Manufacturer and Two Companies Charged
Date: August 14, 2025
Allegation: Involved in a $275 million fraud scheme.
The SEC alleged that the Founder ran two Ponzi-like investment schemes through 2 RIA’s claiming to sell water vending machines to investors that either didn’t exist or were already sold, raising over $275 Million dollars across over 250 investors.
2. Unicoin & Top Executives Charged in Offering Fraud
Date: May 20, 2025
Allegation: Fraudulently raised over $100 million by making false claims that crypto tokens were backed by billions in real estate and equity.
The SEC contends that Unicoin and its executives misled thousands of investors by claiming their crypto “rights certificates” and tokens were backed by billions of dollars in real estate assets and were SEC-registered, while in reality the backing was overstated or non-existent and the offerings were not even registered.
3. PGI Global Founder (Ramil Palafox) Charged with Fraud
Date: April 22, 2025
Allegation: Orchestrated a $198 million crypto and FX fraud scheme, misappropriating more than $57 million.
The SEC alleged that the PGI Global founder raised approximately $200 million from investors by selling memberships in a “crypto and forex auto-trading” business that was falsely marketed and made performance promises that were never delivered. Furthermore, the SEC alleged that the founder misappropriated over $55 Million of those assets for personal benefit and used the remaining funds to pay earlier investors, in classic Ponzi scheme fashion.
4. Upright Financial Corp. and David Yow Shang Chiueh Charged
Date: March 17, 2025
Allegation: Continued fraud despite a prior settlement—invested over 25% of fund assets in a single company and misrepresented the situation, causing $1.6 million in losses.
The SEC alleged that the firm and its founder repeatedly violated their funds stated concentration policy by investing over 25% of the funds’ assets in a single company and/or industry, despite a prior order to stop this practice, which resulted in over $1.5 million in losses to the fund and its investors. The SEC also alleged that the founder misled the Funds board by operating without the required number of independent trustees, misrepresenting the trustee’s independence, withholding key information from the board, and hiring an accountant without the board’s required approval.
A continued focus on investor protection
These cases highlight the SEC’s strong focus on protecting retail investors, particularly those who are more likely to be harmed by fraud, such as seniors or less‑sophisticated investors as well as paying attention to relationship scams, fake crypto platforms, and other social media–based frauds that prey on individual investors.
In addition, traditional insider trading and market manipulation cases, as well as breaches of fiduciary duty by advisers and others, remain a core part of the fraud enforcement agenda while also ramping up its focus on fraudulent behaving via the misuse of technology, including misrepresentations about artificial intelligence, “deepfake” use, or exaggerated technology marketing to draw in investors. Finally, the SEC continues to focus on foreign and cross border fraud, noting an uptick in cross border fraud related to individuals and firms alike.
What does this mean for RIA’s?
CCO’s need to continue being diligent related to testing the authenticity of its books and records, tracking their firm’s PPM’s and client agreements stated investment strategies against the actual investments in Funds and client accounts, and holding their investment professionals to a high standard of transparency and detailed reporting. A focus on segregation of duties whereby no single person controls all stages of processes such as expense approval and money movement are key to preventing fraudulent behavior.
The highest risk areas for fraud that should be a key focus of oversight and testing include:
- Expense reimbursement
- Trade allocation
- Valuations
- Side letters
How Ocorian can help
Our team of expert consultants can help you better align your business to regulatory compliance obligations. We offer ongoing support options to make sure your compliance function and organization is fully aware of the latest regulatory updates. This will help your team build a strong culture of compliance with minimal disruption and cost.
We can also help you identify challenges and pursue opportunities by conducting regulatory due diligence reviews, evaluations of your compliance environment, and provide your staff with customised training suited to your unique business needs.
If you would like to talk more about how you can strengthen compliance at your organization, get in touch.
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