CrowdCheck has blogged many times before about Section 17(b), the stock touting rule. Here’s where we outlined the basics more than ten years ago.
Since then, the SEC has brought many Section 17(b) cases, some of them against some very well-known athletes and influencers. Some of those people were fined millions of dollars for promoting securities without telling people they were being paid for doing so.
The SEC only has civil jurisdiction. They can’t arrest people, and they don’t own any handcuffs (not for professional purposes, anyway).
But you know who does own handcuffs? The Justice Department. And they have whipped them out recently for Section 17(b) cases. Over the course of the last year, several defendants have been charged with criminal conspiracy to violate Section 17(b). You can find the details here. Sentencing (including prison time) will take place over the next few months.
How to avoid doing time? Don’t agree with others to lie about not being paid for touting securities, for a start. And even more basically, don’t violate Section 17(b). That means if you are receiving compensation of any kind (cash, BTC, publicity, discounted products, pony rides) for publicizing the existence of an offering (not even making recommendations), make sure you say you are being paid, by whom, in what form and how much.
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