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Social Media and Securities Investing – Avoiding Investment Fraud

Fraudsters are using social media platforms to lure investors into fraudulent investments. The U.S. Securities and Exchange Commission (SEC) is warning investors about the growing number of investment opportunities that are perpetrated through social media, such as Facebook, Twitter and LinkedIn. Schemers are quick to adapt to these new technologies to hype their bogus and misleading scams. Experts say it the new form of “Affinity,” and social media allows fraudsters to expand their territories. Social media makes it easier for fraudsters to connect with individuals who have expressed interest in their particular type of investment. With today’s new technology, these bogus messages can go viral and attract more innocent investors.

This is why the SEC’s Office of Investor Education and Advocacy issued an Investor Alert to help investors become more aware of fraudulent investment schemes involving social media. The SEC urges investors to become more educated about the various types of schemes and scams that they may encounter on the Internet and other social media. The SEC states investors should take note of the following:

  • Be Wary of Unsolicited Offers to Invest
  • Know the Common “Red Flags”
  • Look out for “Affinity Fraud”
  • Be Thoughtful about Privacy and Security Settings
  • Become familiar with the common investment scams using social media

Investors can review the complete SEC investor alert here to learn more social media and fraud.

The SEC and FINRA suggest that investors arm themselves with education to avoid investment fraud on the internet and social media. Savvy investors ask questions and check the validity of any investment. If investors have a question or concern about an investment, they should contact the SEC, FINRA or a qualified securities attorney.

A few common investment scams using Social Media and the Internet

  • Pump and Dump schemes – Often these schemes are misrepresented and advertised on Facebook, Twitter and other social media. They can appear on the internet in the forms of e-mail spam and fake press releases. Pump and dump schemes boost the price of an owned stock through inaccurate and misleading statements about its success.
  • High-Yield Investment Programs or HYIP – They are often unregistered investments that are operated by unlicensed brokers or individuals. It is a type of Ponzi scheme that promises a high return on investments by paying investors with the money invested by new investors.
  • Internet Offerings – These offerings can be made online and often make bogus claims about a return. They can appear in many different forms and sometimes promise investors a guaranteed return.
Find Legal Help and Advice

If you feel uneasy about an investment opportunity or have become a victim of an investment scheme on social media, contact the securities lawyers at Silver Law Group, a national Securities Arbitration & Investment Fraud Law firm. Their lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to security and investment fraud or stockbroker misconduct. The securities lawyers at Silver Law Group work hard to protect your money from the bad guys. Contact us at (800) 975-4345.

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