The Securities and Exchange Commission launched a new tool to help with investor protection: The SEC Action Lookup for Individuals – or SALI. (Is it pronounced “sally”?)
SALI is a database of individuals who (1) have been parties to past SEC enforcement actions and against whom federal courts have entered judgments or (2) the SEC has issued orders.
I would guess this is the SEC’s response to BrokerCheck as it has been trying to level the playing field between brokers and investment advisers. While BrokerCheck could tell you the disciplinary history of a broker, there was not an authoritative source for investment advisers. Of course, there are sources. The Form ADV Part 2 has a disciplinary section. That’s subject to self-reporting and reliant on distribution by the adviser. Less scrupulous advisers may not hand them out.
There is also the larger field of unregistered individuals who have been subject to SEC enforcement actions. SALI will provide a searchable spot for that type of investor review. At least for the data entered which currently only goes back to 2014.
“One of the SEC’s most important tasks is to arm our investors with the tools necessary to identify potential fraudsters. An important risk factor is whether the person you are dealing with has a disciplinary history with the SEC or other regulators,” said SEC Chairman Jay Clayton. “SALI provides Main Street investors with an additional tool they can use to protect themselves from being victims of fraud and other misconduct.”
Does it work?
First, I went and entered my name. No results, as expected. Then I went to SALI and entered “Preston“. It pulled up Caleb Preston and Charles Preston and their mortgage loan fund fraud. It includes links to the complaints, press release and judgment.
Great.
I went to SALI and entered “Cohen”. I was surprised not to see Steve Cohen. After all he was subject to a disciplinary action in 2016. His punishment lapsed at the end of 2017. I tried again with “Tilton”. No results. She won her case. That was true for Cohen. His punishment merely lapsed.
I’m not sure that is the right result for Cohen. It’s probably the right result for Tilton.
According to the details:
“Your results will not include individuals whose cases are currently pending at the trial court or those against whom no judgment or order has been issued.”
That is true for Tilton. It’s not true or unclear for Cohen.
Regardless of its flaws, it’s great to see a new tool from the SEC. One that I’m sure will get better as the SEC adds more to the search history and clarifies what gets expunged.
Sources:
- SEC Launches Additional Investor Protection Search Tool
- SEC Action Lookup – Individuals
- About this Feature in Detail