FINRA has seen a recent significant spike in investor complaints resulting from recommendations made by fraudulent "investment groups" promoted through social media channels. Complaints received by FINRA and posted on social media describe bad actors, posing as registered investment advisors, who initially advertise "stock investment groups" on Instagram and other social media channels and then turn to encrypted group chats on WhatsApp to communicate with interested investors and pitch investments.

Since November, FINRA has received nearly a dozen investor complaints regarding this threat, alleging millions of dollars in total losses. And if history is a guide, it's likely that this is just the tip of the iceberg.

As with other broker imposter scams, the bad actors might falsely portray themselves as registered professionals, in some recent cases fraudulently claiming affiliation with well-known public figures and others in the investment industry -- people who are not involved in the scheme. The scammers also create fake personas by taking the name and other publicly available details about a registered investment professional with a spotless disciplinary history. They then misuse this information to establish legitimacy, unbeknownst to the actual investment professional being impersonated.

Continue reading

Source Fool.com