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Investors Beware: Scammers Pose as Regulators

Brokerage overseer says it's mentioned in fraud emails

scammer working on computers

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This man may look like a fraudster, but emails sent by con artists are tougher to spot.

The Wall Street regulator FINRA, the Financial Industry Regulatory Authority, which aims to protect investors from scam artists, says those artists are targeting investors — using FINRA’s name.

The overseer of U.S. brokerages recently issued an alert indicating that, as part of a scheme to collect fraudulent fees, criminals are sending emails purporting to be official communications from FINRA.

Those communications, supposedly part of a FINRA effort to compensate victims of securities fraud, are actually a tool to extract more cash from people who have been previously ripped off.

One fraudulent email, brought to FINRA’s attention last fall by the daughter of a man targeted by the scam, employs a standard technique of con artists: pretending to represent a government agency or regulator. Scammers, for example, often represent that they are working for the Internal Revenue Service or the Securities and Exchange Commission.

“It’s a common tactic that cons use to bolster their credibility,” said Gerri Walsh, senior vice president of investor education at FINRA. 

The fake FINRA message had been sent to an older American who had lost money in an earlier stock scam. The sender indicated that FINRA was attempting to reimburse the investor more than $160,000 for his losses, but the investor would have to first pay an upfront fee of $15,000. The emailed request for funds features FINRA’s logo and the name of the organization’s president and CEO, Robert W. Cook.

One of the best things you can do to protect yourself from impostors and other scammers, said Walsh, is to independently check the information they give you. That’s what this particular target’s daughter did. “She was worried about her elderly father,” Walsh said.

This is not the first time that FINRA has alerted people about con artists using its name. The regulator issued a warning 10 years ago about a similar scheme targeting overseas investors. And in 2016, it reported that criminals were trying to steal people’s personal information by masquerading as FINRA hiring managers and conducting job interviews via Skype.

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