FINRA Issues Warning Amid Surge in "Investment Group" Frauds on Social Media

Posted on February 8th, 2024 at 2:27 PM
FINRA Issues Warning Amid Surge in

From the desk of Jim Eccleston at Eccleston Law 

The Financial Industry Regulatory Authority (FINRA) reports a surge in investor complaints related to fraudulent "investment groups" exploiting social media platforms.

According to ThinkAdvisor, the bad actors, posing as registered investment advisers, use platforms like Instagram to advertise stock investment groups, later shifting communication to encrypted channels like WhatsApp to engage with potential investors and pitch investments. The complaints describe substantial losses, with nearly a dozen cases reported since November.

The scheme typically involves promoting well-known stocks and steering investors towards low-priced, low-volume securities, leading to price manipulation and eventual market crashes. ThinkAdvisor reported that investors are coerced to open accounts with specific broker-dealers and are guided on stock purchases, ultimately losing control over their investments. Scammers, promising to recover losses, persuade investors to transfer more funds, perpetuating the fraudulent scheme.

FINRA advises investors to exercise caution regarding unsolicited messages or social media promotions and to use tools like FINRA BrokerCheck to verify the legitimacy of investment promoters.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, finra

Return to Archive

TESTIMONIALS

Previous
Next

I learned two important things working with Eccleston Law. First, I made a friend and ally with Jim and Steph for life. Secondly, and this is a crucial life lesson - if you need counsel, then seek out the very best. Jim was referred to me by a most trusted source. I've never had to hire an attorney for anything. Now, I know the value of hiring an important partner. Meticulous, thorough and detailed in preparation is the best way to describe Jim. Brilliant too, I might add. Bottom line, I would highly highly recommend Jim and Stephany for your legal needs. One of the best life decisions I've ever made.

Howard S.

LATEST NEWS AND ARTICLES

September 15, 2025
California Young-Gun Investor Charged in Alleged $6 Million Ponzi Scheme

Federal prosecutors have accused Mihir Deepak Sukthankar, a California resident once celebrated as a teenage trading “prodigy,” of orchestrating a multi-million-dollar Ponzi scheme.

September 12, 2025
LPL Broker Fined and Suspended for Recommending Risky Investments to Elderly Client

An LPL Financial broker in Elizabethtown, Kentucky, has agreed to sanctions after FINRA found he violated Regulation Best Interest (Reg BI) when recommending unsuitable investments to an elderly customer.

 

September 11, 2025
Montana Federal Judge Allows Family's Premium Financing Claims to Proceed

A federal judge in Montana has allowed a family to move forward with negligence, fraud, and unjust enrichment claims tied to a premium-financed life insurance arrangement valued at $67.5 million.