The Financial Industry Regulatory Authority says it's seeing a "significant spike" in investor complaints of recommendations made 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 advisers, who initially advertise 'stock investment groups' on Instagram and other social media channels and then turn to encrypted group chats on WhatsApp to communicate with interested investors and pitch investments."
Since November, FINRA said that it has received "nearly a dozen investor complaints regarding this threat, alleging millions of dollars in total losses."
As with other broker imposter scams, FINRA states that "the bad actors might falsely portray themselves as registered professionals, in some recent cases fraudulently claiming affiliation with well-known public figures and others in the investment industry — people who are not involved in the scheme."
The scammers, FINRA states, "also create fake personas by taking the name and other publicly available details about a registered investment professional with a spotless disciplinary history. They then misuse this information to establish legitimacy, unbeknownst to the actual investment professional being impersonated."
Scammers, according to FINRA, "start out by promoting investment in a well-known, actively traded stock and then, through ongoing conversations in the private chat platform, move their targets to invest in a low-priced/low-volume U.S.- or Hong Kong-listed stock."
