In the midst the current COVID-19 pandemic, the SEC is paying attention. The Division of Enforcement has made clear that it will act, and act quickly, to stop fraudulent conduct that falls under its jurisdiction related to the pandemic.

Stephanie Avakian, co-director of the SEC's Division of Enforcement, has warned, "the Enforcement Division is committed to swiftly shutting down COVID-19 investment scams, seeking trading suspensions where appropriate, and pursuing fraud charges against both entities and individuals when warranted."

The SEC has taken actions to back up Avakian's words. Most recently, the SEC's Miami Regional Office brought an enforcement action against a West Palm Beach company and its CEO for allegedly issuing false or misleading press releases claiming the company was able to acquire and supply large quantities of N95 or similar masks to protect wearers from the COVID-19 virus.  And, as has been widely reported, the SEC has issued a litany of trading suspensions, including Zoom Technologies (not the video conferencing platform we are all using, hence the suspension due to confusion).

While there are, without a doubt, legitimate business opportunities that are available in this current environment, companies that are poised to seize on those opportunities should do so with caution, particularly if they are subject to reporting requirements and/or are traded on any index, from the OTC on up.

So, what guidance should companies and their executives should be following?

The SEC chairman along with the SEC's director of Division of Corporate Finance have issued a public statement titled "The Importance of Disclosure—For Investors, Markets and Our Fight Against COVID-19," that should be a must read for every executive. Stressing the need that companies must provide full and accurate disclosure in this ever-changing economic landscape, companies must consider where the company stands today, operationally and financially compared to its pre-pandemic operations, how the company's COVID-19 response, including its efforts to protect the health and well-being of its workforce and its customers, is progressing, and how its operations and financial condition may change as all our efforts to fight COVID-19 progress. Historical information may be relatively less significant.

That said, given the SEC's clear emphasis on enforcement, there is the ever-present danger of misinterpretation and over-reach. Companies, in non-COVID-19 times, were entitled to certain leeway with respect to projections and "puffery." While the law remains unchanged from a mere two months ago (which seems like a lifetime ago in these times), there is the potential for a different initial interpretation by the SEC and the courts in the grey areas given the current climate.  As always, striking the proper balance is the key.  In times like these, however, given that everything is out of balance, where that sweet-spot falls is going to be a matter of interpretation and advocacy.

While we are all following COVID-19 "curve," hoping it continues its apparent downward trend, do not be surprised if the SEC enforcement numbers show the opposite. Companies and their executives should be vigilant to avoid becoming a statistic.

Russell Koonin and Adam Schwartz are partners at Homer Bonner Jacobs Ortiz, located in Miami Florida. Koonin and Schwartz both previously served as SEC Senior Trial Counsel, and were Assistant U.S. Attorneys in the Southern District of Florida. They can be reached at [email protected] and [email protected], respectively.