FINRA Cautions Investors About Scams Involving the Impersonation of the SRO

The Financial Industry Regulatory Authority is warning investors to watch out for financial schemes in which the fraudsters are pretending to be the self-regulatory organization. FINRA released its Investor Alert noting that there have been scammers using its FINRA logo and name. In some instances they are even forging the signature of FINRA president and CEO Robert W. Cook to try and solicit funds for fraudulent investments. Use of FINRA’s name appears to be geared toward making the scheme appear legitimate.

For example, an investor contacted the SRO to report one instance that purportedly involved the fraudster sending a letter that was supposedly from Cook and guaranteeing a proposed investment. The letter, however, had a number of errors, including mistakes involving FINRA’s name and its leadership titles. Another alleged fraud involved e-mail pitches, again purportedly from Cook. The correspondence told targets that their outstanding inheritance fund had been “approved for release.” They were instructed to go abroad (beyond the jurisdiction of US authorities or regulators) to obtain this money. Meantime, the targets were asked to share certain personal data.

A regulator imposter fraud might ask the victim to pay an advanced fee. In such scams, investors are asked to pay certain fees related to the purchase of stock shares that, in truth, are not doing well or are “virtually worthless.” However, upon sending the funds, investors rarely see the money returned to them or the funds that a stock buyback was supposed to render. The fraudster may even ask for more money.

In its alert, FINRA stated that the SRO and its executives would never guarantee any investment or offer nor would they try to get someone to invest.

In 2016, the US Securities and Exchange Commission issued its own alert warning of impersonators sending out communications and documents pretending that they were from the government regulator. The Investor Alert, issued by the Office of Investor Education and Advocacy, cautioned that people who had already been victims of fraud appeared to be the ones targeted. Fraudsters would offer to help investors get back their money—for a fee, such as a refundable insurance bond, deposit, or tax. Scammers might also pretend to offer and charge for legal services to help the investor recover their funds, either through a class action case or from an SEC enforcement action.

The best way of obtaining compensation or financial recovery from investment fraud is to speak with an experienced securities law firm that can help you explore your legal options and represent you and your case.

Fraudsters have been known to impersonate regulators, financial advisers, brokers, as well as the investors whom they are bilking, in order to perpetuate certain scams. This can lead to huge losses for many investors who made their investments in good faith. It is important that an investor conduct their due diligence to make sure that the person or company they are investing through is legitimate, as is the proposed investment. Unfortunately, fraud can still happen.

If you are someone that has suffered substantial investment losses and you suspect that investor fraud may have been involved, please contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Finra’s Investor Alert (PDF)

More Blog Posts from SSEK Law Firm:

Two Former Morgan Stanley Investment Advisers Accused of Fraud Plead Guilty, Stockbroker Fraud Blog, January 31, 2018

CFTC and Massachusetts Regulator Accuse Bitcoin and Cryptocurrency Operators of Selling Unregistered Securities, Stockbroker Fraud Blog, January 22, 2018

Ameriprise Ordered to Pay $8M Over F-Squared Alpha Sector Strategy Sales, Institutional Investor Securities Blog, November 8, 2017

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