SEC’s Social Media Fraud Warnings

This information came out last month, but is important to note. The U.S. Securities & Exchange Commission (the SEC) put out information about investment fraud and social media in January:

These alerts were prompted by charges laid on January 4th against Anthony Fields, an Illinois-based investment advisor who offered to sell more than $5 billion in fictitious securities on LinkedIn and other social networking sites. He used LinkedIn specifically to promote fake “bank guarantees” and “medium-term notes.” (See: SEC Press Release 2012-3 dated January 4, 2012)

The SEC says that social media is attractive to fraudsters for these reasons:

  • there’s an ability to contact many people at a low cost
  • it is easy to set up a social network account, website, email and other webpages to make oneself look legitimate
  • it is difficult to track down the true owners of a social network account.

Related:

FINRA Warns Investors of Social-Media Linked Ponzi Schemes, High-Yield Investment Programs (July 15, 2010)

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