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Beware of Fraudsters Impersonating Investment Professionals and Firms – Investor Alert

Dec. 11, 2024

The Federal Bureau of Investigation (FBI) Criminal Investigative Division and the SEC’s Office of Investor Education and Advocacy (OIEA) warn investors of a significant uptick in tips, complaints, and referrals involving impersonations of investment professionals, including registered representatives and investment adviser representatives. Impersonations have become more sophisticated in the wake of technological advancements, including the development of artificial intelligence (AI). Additionally, the rise of social media has made it easier than ever for impersonators to contact investors. For example, impersonators may solicit investors through platforms such as Facebook, LinkedIn, or WhatsApp (including through investment-related groups or chats) or draw investors to a fake website by posting fictitious comments online (including on YouTube videos).

Impersonators Go To Great Lengths To Conceal Their Identities In Investment Scams.

Fraudsters seeking to lure investors into scams may impersonate investment professionals or impersonate firms that are registered with a state securities regulator, the Financial Industry Regulatory Authority (FINRA), or the SEC. In conducting impersonation scams, fraudsters may:

  • Use the actual name or other information of an investment professional or firm to open email, social media (including Instagram and LinkedIn), or online advertising (including Facebook, Google Ads, Instagram, and WhatsApp) accounts; to incorporate legal entities; or to register website domain names;
     
  • Create fake websites that use a logo, photo, or website likeness of an investment professional or firm, or that link to the actual website of an investment professional or firm;
     
  • Call you from a spoofed phone number that appears connected to the investment professional or firm they are impersonating;
     
  • Copy genuine information about the investment professional they are impersonating (including the registration number and information about employment history and credentials contained in the public websites for FINRA’s BrokerCheck or the SEC’s Investment Adviser Public Disclosure database);
     
  • Encourage investors to research the investment professional or firm they are impersonating; or
     
  • Disguise their true identities with voice-changing software, messaging services, writing assistance tools, or AI-generated content (including cloned voices, altered images, and deepfake videos).

How Can I Avoid Investment Scams Involving Impersonators?

Here are tips that may help you to avoid being scammed by an impersonator posing as an investment professional or firm:

  • Independently verify that you are communicating with an investment professional at a registered firm and not an impersonator. One way you can do this is by contacting the professional using a phone number or website listed in the firm’s Client Relationship Summary (Form CRS). To ensure you are looking at a genuine copy of the firm’s Form CRS, follow these steps:
  1. In the “Check Out Your INVESTMENT PROFESSIONAL” search box on Investor.gov, select “Firm” from the drop-down options and type in the name of the firm.
     
  2. In the search results, click on the relevant firm and then click on “Get Details.”
     
  3. Click on “Relationship Summary” or “Part 3 Relationship Summary.”
  • Don’t use the website or contact information that the person provides you; use contact information that you independently verify as explained above.
     
  • Don’t rely on contact information in messaging forums or on social media (for example, in Instagram or LinkedIn profiles), as an impersonator may have posted it.
     
  • Be suspicious if the person wants to communicate with you through an encrypted messaging app (such as Telegram or WhatsApp) or an email address that appears unrelated to the person’s firm.
     
  • Be skeptical if the person refuses to provide you with a phone number, to talk with you on the phone, or to meet with you over video chat or in person. Note that fraudsters may go so far as to impersonate an investment professional on the phone, over video chat, or in person. But refusing to talk, or to meet, with you is a red flag.
     
  • Never rely solely on customer reviews or testimonials in making an investment decision. Fraudsters sometimes publish fictitious customer reviews or pay people to appear in fake testimonial videos.

The SEC Has Taken Enforcement Action Involving Impersonations Of Investment Professionals.

In SEC v. Onyeachonam, Asiegbu, and Nweke-Eze, the defendants allegedly created websites that impersonated actual registered representatives and investment adviser representatives. The SEC alleges that in the comments section of YouTube videos, the defendants posted comments from fictitious brokerage customers and/or advisory clients praising the professionals’ investment services and trading success, and luring investors to their fake websites.

According to the SEC’s complaint, sometimes the defendants reached out to investors using fake LinkedIn personas or through investment group chats in encrypted messaging apps to encourage investors to research the investment professional whose identity they had stolen.

The defendants allegedly instructed investors to download trading account apps in order to open accounts at specific broker-dealers and crypto asset trading platforms. Then the defendants allegedly instructed the investors to purchase bitcoin with the funds in the crypto asset accounts, to send the bitcoin to a blockchain address to “fund” their investments in securities, and to provide their login credentials for purportedly syncing the investors’ accounts to the defendants’ copy trading program. The SEC alleges that although the defendants never invested investors’ money as promised, they directed investors to fake investment account platforms where investors could view purported high returns. As alleged by the SEC, seeing these sham high returns caused many investors to invest additional funds, often in response to offers of new trading strategies requiring additional funds to maximize investor returns. The SEC’s complaint alleges that when investors tried to withdraw their funds, they were typically asked to pay commissions or performance or other fees. The SEC also alleges that, by this time, the bitcoin had already been stolen and moved through multiple blockchain addresses.

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Don’t rush into any investment decision. Always verify the identity of anyone offering or selling you an investment. If you suspect someone is falsely claiming to be an investment professional, do not give the person any money and do not share your personal information. Report the person to the SEC at www.sec.gov/tcr.

Additional Information

Impersonation Schemes webpage

FINRA Investor Insights: Be Alert to Signs of Imposter Investment Scams

Report possible securities fraud to the SEC. 

Ask a question or report a problem concerning your investments, your investment account or a financial professional.

Visit Investor.gov, the SEC’s website for individual investors. Receive Investor Alerts and Bulletins from OIEA by email or RSS feed.

 
This Investor Alert represents the views of the staff of the Office of Investor Education and Advocacy. It is not a rule, regulation, or statement of the Securities and Exchange Commission (“Commission”). The Commission has neither approved nor disapproved its content. This Alert, like all staff guidance, has no legal force or effect: it does not alter or amend applicable law, and it creates no new or additional obligations for any person.

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