TheCorporateCounsel.net

This week is “World Investor Week” – and with that, the SEC announced that it is coordinating with global financial regulators to raise fraud awareness. The regulators issued this joint bulletin to encourage long-term, resilient investment approaches and to flag common scams.

In addition to the increasing prevalence of phishing attacks and relationship scams, the bulletin says that the bad guys are getting good at AI impersonations. “Fake SEC filings” are also part of their disguise toolkit:

– Fraudsters might impersonate organizations or individuals to lure investors into scams. They might impersonate government agencies or employees, or legitimate investment professionals like brokers and investment advisers. Impersonators might be part of an advance fee scam, or might use personal information they obtain to steal an individual’s identity or misappropriate their financial assets.

– Communications — including phone calls, voicemails, text messages, messages sent via social media or apps, emails, letters, and certificates—might falsely appear to be from the SEC, FINRA, the CFTC, NFA, or other organizations. Be very skeptical if you’re contacted by someone claiming to be from the SEC, FINRA, the CFTC, NFA, or other organizations asking about your shareholdings, account numbers, trading activity, PINs, passwords, digital addresses, digital wallet private keys or seed phrases, or other information that might be used to access your financial accounts. This might be part of a scam to compromise your investment, financial, or other personal accounts. Fraudsters might also claim to be from an investor protection organization such as SIPC and falsely require payment from investors to obtain protection or the return of assets. SIPC will never require payment to obtain protection or assist in recovery. Call the organization using a phone number on their public website — not a number that’s provided by the contacting party — to verify the legitimacy of the ask before providing any personal information or sending any money.

– In some cases, fraudsters have made SEC filings and mischaracterized these filings in order to appear legitimate. Fraudsters have used SEC exempt reporting adviser (ERA) and Form D filings to falsely tell investors that they’re registered with the SEC or have shown investors a fake certificate from the SEC. They’ve also used Form 4 filings to claim that the fake filings confirm the investor’s purchase of shares, even though the trades were never made and the fraudsters might have simply stolen the money. Do not invest with anyone who misrepresents that they’re registered with the SEC or mischaracterizes SEC filings.

It is ironic that the scammers are doing compliance things as part of their fraud – the very things that all of us rule-followers worry that we’ll get in trouble for missing.

– Liz Dunshee