FINRA's recent Investor Alert struck a dark chord. It must be strange to have to make an announcement that you're own name and identity is being used against you. But that's exactly what's happening to FINRA, and the unfortunate investors who have been targeted by fraudsters trading on the FINRA name
According to FINRA's alert, non-US investors have increasingly been approached by con artists who have started creating fake "regulator" websites in order to convince investors to part with their hard-earned money. Some exceptionally brazen scammers have actually called investors and used FINRA's name and impersonated FINRA employees in an effort to make themselves look legit.
The Advance-Fee Scam
Although FINRA's name has gotten dragged through the mud in a variety of different schemes, the advance-free scam has become the most prevalent in recent months. Typically, the scam starts with a phone call or piece of correspondence inviting you to buy shares of stock you already own at a high price. In order to capitalize on the opportunity, you must pay the agent fees in advance of services rendered. To establish legitimacy, the scammer will often direct you to a website which resembles a regulatory authority. There, you will find information intended to protect investors from - you guessed it - scam artists! If you are foolish enough to pay the advance-fee to one of these phony agents, you will never see your money again.
US Investors Not Immune to Regulator Frauds
While the advance fee scam most often targets non-US investors, using US regulatory agencies for cover, US based investors have also received calls and communications from con artists impersonating regulators. While the specifics may differ, the intent is always the same. To create an urgent opportunity and then to try to establish trust and legitimacy by reference to a regulatory body.
What to Do If You Think You've Been Contacted by a Scammer
FINRA and the SEC have extensive resources for reporting and detecting potential scams. You can call them or visit their websites - their real ones! - and make inquiries. If you are given a name by the representative who has contacted you, you may also use FINRA's database, BrokerCheck, to determine whether the person is a registered member of FINRA and permitted to trade securities to the public.