SEC Warns Investors of Investment Fraud on Social Media
The SEC Office of Investor Education and Advocacy ("OEIA") warned investors about the potential dangers of relying on investment advice delivered through social media.
In an Investor Alert, the OEIA urged investors to "be skeptical and never make investment decisions based solely on information from social media platforms or apps." The OEIA found that investors have become increasingly reliant on social media for investment advice.
The OEIA warned investors to be wary of:
- fraudsters that may falsify credentials and celebrity endorsements;
impersonation scams where fraudulent actors may impersonate legitimate brokers or investment advisers;
"crypto" investment scams that take advantage of the fear of missing out to lure investors in;
romance scams where perpetrators may convince individuals to make an investment or wire money through anonymous messaging to conceal their identity;
market manipulation schemes where actors may engage in "pump and dump" schemes, scalping, touting or general fraud; and
"community-based" fraud that targets groups with common traits and exploits the trust that exists within the group.
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