Kevin Thompson: Understanding Unregistered Securities

The MLM Attorney: The Linchpin in the SEC’s Cases Against Network Marketing Companies

While entrepreneurs and marketers alike are often aware of the FTC’s involvement in the direct sales space, clients largely remain unaware of the Security and Exchange Commission’s (“SEC”) involvement in network marketing. The SEC oversees the enforcement of federal securities laws. This means the SEC is designed to ensure companies do not offer or sell securities in the absence of proper registration with the SEC.

In Part One of this two-part series, I answer the basic question “What is a Security?” I explain in some detail the elements required for the SEC to conclude the existence of a Security.  I also discuss how it all relates to network marketing.

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