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

Thank You from the bottom of our hearts for all you have done for us. When we realized this was a very bad investment - we did not know where to turn for help. Then we received your name. When we called you - you were so kind to us and then agreed to help us. For this we are so very grateful. The world would be a much nicer place if there were more people like the two of you in it. We will always remember all the help and kindness you have shown us. Thank you so very very much for everything.

Wayne and Judy S.

LATEST NEWS AND ARTICLES

July 26, 2024
Kentucky Advisor Sues LPL Financial for Alleged Corporate Raid

A Kentucky advisor, Mark Lamkin, has filed a lawsuit against LPL Financial, claiming the independent broker-dealer orchestrated a corporate raid that resulted in the loss of his firm’s entire book of managed assets.

July 25, 2024
FINRA Plans Fee Increases Amid Rising Costs and Losses

The Financial Industry Regulatory Authority (FINRA) has announced plans to raise fees for its approximately 3,300 broker-dealer member firms. According to AdvisorHub, the self-regulator faces soaring costs, as detailed in its annual report published at the end of June.

July 24, 2024
Raymond James Settles with Oregon Over Excessive Commissions

Raymond James recently settled a case with Oregon's Division of Financial Regulation (“DFR”), agreeing to pay nearly $200,000 over allegations of charging excessive commissions to retail investors.