Jan 15, 2020 ⋅ 2 min read
The SEC has issued a warning related to trading investing in IEOs. According to the agency,
IEOs may be conducted in violation of the federal securities laws and lack many of the investor protections of registered and exempt securities offerings
In the cases where they constitute the sale of a security, the issuer would be required to register as a security with the SEC along with the exchange as an alternative trading system (ATS) and potentially a broker-dealer. The SEC stresses that these types of investment vehicles can be used for fraudulent purposes given the lack of adequate reporting requirements. If an offshore entity offers to any U.S. based person then they are breaking the law, however, the investor may have limited legal remedy due to the nature of applicable laws in the foreign country.
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