Unregistered investments are securities or investments that haven’t been formally registered with the Securities and Exchange Commission (SEC) or relevant state regulators, raising significant risks for investors. Registered investments undergo regulatory scrutiny, requiring detailed prospectuses outlining risks, investment strategies, and management backgrounds. Unregistered offerings lack this transparency, making informed decision-making difficult for investors. Unregistered investments are more susceptible to fraud – operating outside the regulatory framework allows fraudsters to mislead investors with less oversight. If an unregistered investment turns out to be fraudulent or performs poorly, there are limited options for investors to recover their losses. Regulatory bodies may not be able to intervene, and legal action can be complex and expensive.

Individuals with knowledge of an unregistered investment can report their concerns to the SEC or state regulators, triggering investigations and potentially preventing investor losses. The success of a whistleblower report hinges on providing concrete evidence, such as marketing materials, internal communications, or data on investment activity. The SEC Whistleblower Program offers financial rewards to individuals who provide original information about violations of securities laws.