FINRA has observed a recent significant spike in investor complaints stemming from recommendations by fraudulent “investment groups” promoted through social media channels. Complaints received by FINRA and posted on social media describe bad actors posing as registered investment advisors who initially advertised “Equity Investment Groups” on Instagram and other social media channels; The company will be moving to encrypted group chats on WhatsApp to communicate and pitch to interested investors. investment.
Since November, FINRA has received more than a dozen investor complaints regarding this threat, alleging losses totaling millions of dollars. And if history is any guide, this is likely just the tip of the iceberg.
What you need to know
As with other broker scams, the bad actors pretend to be registered professionals and, in some recent cases, engage in communications with high-profile celebrities and others in the investment industry, people not involved in the scheme. You may fraudulently claim a relationship. Scammers also create fake personas using names and other publicly available details of registered investment professionals with impeccable disciplinary records. They then misuse this information to establish their legitimacy, unbeknownst to the actual investment professionals being impersonated.
Scammers first advertise investments in well-known and actively traded stocks, and then, through ongoing conversations on private chat platforms, trick their targets into investing in low-priced/low-volume U.S. or Hong Kong-listed stocks. Move to. They instruct investors to open an account with a particular broker-dealer, tell them which stocks to buy, how much to buy, when to buy them, and at what prices, essentially blinding investors to in order to raise and manipulate the prices of securities. At some point, investors will no longer be able to sell, and the price of the security will inevitably collapse.
Scammers try to convince investors to transfer as much money as possible from other banks or brokerage accounts. When investors report losses, the scammers promise to “get their money back” if the investors can transfer more funds to their accounts. One victim reported that scammers were asking investors to borrow money from friends and family to recover lost money.
how to protect yourself
To avoid falling victim to these or other types of ramp-and-dump scams, be especially wary of unsolicited messages and social media promoting investment opportunities. Always research investment professionals before making an investment. Use FINRA BrokerCheck to verify whether a promoter is a registered investment professional and to verify that the individual and company names, addresses or business locations match our own research. Never invest in a product without first carefully and independently evaluating it. Also note that many brokerage firms in the US specifically prohibit registered investment professionals from conducting business using channels such as his WhatsApp.
Learn more about how to protect yourself from similar financial grooming, known around the world as pig butchering fraud.
If you believe you have been the target or victim of a stock price manipulation scheme, please submit regulatory information to FINRA.