SEC Warning to Investors: Watch Out for Fraudsters Posing As Regulators

The Securities and Exchange Commission wants investors to watch out for scammers pretending to be SEC employees who are soliciting investments. The warning is an update of a previous alert. The Commission is issuing it once again in the wake of a rise in the number complaints about this type of fraud.

In its alert, the SEC said that it does not endorse financial solicitation offers, help in the sale or purchase of securities, or take part in money transfers. The agency also noted that it isn’t associated with any drawings, sweepstakes, lotteries, or other events involving prizes, winnings, or money windfalls.

Fraudsters have been known to solicit targets by phone, e-mail, and other means, and they are likely to ask for detailed financial and personal information. The SEC says to watch out for anyone claiming to be affiliated with the federal agency and who claims to be looking for help with a fund transfer, wants to send over an investment offer, offers to provide advise about securities or financial assistance (for an upfront fee), or tells you that you are eligible for disbursements from a class action settlement or an investor claim fund.

Unfortunately, financial fraudsters have also been known to affiliate themselves with nonexistent government agencies and international organizations to make themselves appear legitimate. Scammers will pretend to give you that organization’s phone number. In some cases, when the agency that they “represent” actually does exist, the number will likely lead to their co-fraudsters instead. Some financial may even use a regulator’s seal or make up a fake one.

If you believe that you were the victim of investment fraud, please contact our securities fraud law firm so that we can help you explore your legal options. Over the years, Shepherd Smith Edwards and Kantas, LTD LLP has helped thousands of investors recoup their losses.

To avoid becoming the victim of these types of financial scams, the SEC recommends that you:

• Make sure you are in fact dealing with real regulators. You can look online on the SEC’s Division Homepages or the Web sites of the International Organization of Securities Commissions and the North American Securities Administrators Association for their directory lists.

• Be wary any investments that are touted as having government “approval.” The SEC doesn’t assess securities offerings or approve any investment. Remember to check whether the securities being offered to you are registered with the SEC or exempt from registration requirements.

• Don’t let impressive letterheads and seals fool you. Remember, anyone can cut and paste graphics or design their own in this technology age. The same goes for fancy brochures and impressive Web sites.

• Watch out for “Recovery Room” and “Advance Fee” scams.

Investor Alert: SEC Warns of Government Impersonators, SEC (PDF)

International Organization of Securities Commissions

North American Securities Administrators Association

More Blog Posts:

SEC to Concentrate on Financial Firms Where Management is Not Doing Enough to Promote Compliance, Stockbroker Fraud Blog, February 18, 2012

Securities and Exchange Commission Charges Investment Adviser with Committing Securities Fraud on Linked In, Stockbroker Fraud Blog, January 6, 2012

SEC Chairwoman Defends ‘No Wrongdoing’ Settlements, Institutional Investor Securities Blog, February 27, 2012