The U.S. Securities and Exchange Commission (SEC) has set guidelines to disqualify so-called “bad actors” from participation in securities offerings. These disqualifications apply to individuals or entities with a history of securities law violations or related legal issues. The criteria for disqualification include:

1. Criminal convictions related to securities transactions, false SEC filings, or specific securities-related businesses.
2. Court injunctions or restraining orders related to securities transactions, false SEC filings, securities-related business activities, or obtaining money or property through false representations.
3. Final orders from certain financial regulators barring the individual or entity from associating with a regulated entity, engaging in specific financial business activities, based on violation of antifraud rules, or any postal service false representation order.
4. SEC orders revoking the registration of a regulated person, limiting their activities, or imposing industry, collateral, or penny stock bars.
5. SEC cease-and-desist orders related to the antifraud rules based on fraudulent intent or violations of Section 5 of the Securities Act.
6. Suspension or expulsion from a self-regulatory organization such as the Financial Industry Regulatory Authority (FINRA).
7. For any registrant, issuer, or underwriter named in any registration statement or Regulation A offering statement filed with the SEC, the issuance of a suspension or stop order with respect to such statement, or any ongoing investigation related to these issues.

In simpler terms, individuals or entities with a history of legal issues or violations in securities transactions, as outlined above, could be considered “bad actors” by the SEC and may be barred from participating in securities offerings.