Social media and messaging fraud is becoming ever more sophisticated. In a worrisome recent trend, impersonators are increasingly posing as legitimate investment professionals and firms registered with the Securities & Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA). At the end of last year, the FBI and SEC issued a warning about the increase in impersonations of investment advisors/firms citing the instant and massive reach of social media combined with the rising capabilities of Artificial Intelligence.
Impersonators of legitimate investment advisors can reach out to anyone through popular platforms such as Facebook, LinkedIn or WhatsApp (including through investment-related groups or chats). Or they might draw people to a fake website by posting fictitious comments online (including on YouTube videos).
These are sophisticated scams because the impersonators can mimic legitimacy in multiple, intersecting ways to maintain the appearance of propriety. They can use the actual name or other information of an investment professional or firm to open legitimate looking social media and messaging accounts, email accounts, phone numbers, online advertisements and even fake websites and investment platforms.
The goal of all this nefarious work is to lure unsuspecting members of the public into believing they are dealing with a legitimate investment advisor and to then use that trust to defraud them. Samples of some frauds include asking for transfer of funds, sometimes in the form of bitcoin, for investments that do not exist; encouraging people to join fake investment clubs for a fee; or boosting stocks to further pump-and-dump schemes. To establish trust, fraudsters may even encourage people to research the investment professional they are impersonating!
Our Own Experience
In operation since 1967 as a highly regarded wealth management firm, it is not surprising that LNW has also recently been the target of an impersonator. We have been alerted that our employees have been impersonated on the instant messaging app WhatsApp, including our Chief Investment Officer Ron Albahary, CFA. Ron has posted a warning about imposters on his LinkedIn page and we also posted an alert on the LNW LinkedIn page.
Our clients know that our team does not rely on WhatsApp to communicate with them. They also know that:
- No one on our team would ever offer any financial advice, let alone recommend specific investments, anywhere online.
- We do not hawk investments to the masses. We zealously guard our clients’ privacy and security while managing their investment portfolios in line with their goals.
Please contact us by trusted, official channels, such as our corporate email (hello@lnwadvisors.com) or phone system (800-475-9159) if anyone purporting to be LNW staff solicits you online. Please be wary of impersonators and do not share personal information or send money to anyone conducting business through unofficial channels.
How to Verify Identity for Investment Professionals
The SEC suggests these ways to avoid being scammed by an impersonator posing as an investment professional or firm.
- Independently verify that you are communicating with an investment professional at a registered firm and not an impersonator. One way you can do this is by contacting the professional using a phone number or website listed in the firm’s Client Relationship Summary (Form CRS). To ensure you are looking at a genuine copy of the firm’s Form CRS, follow these steps:
- On Investor.gov, go to the “Check Out Your INVESTMENT PROFESSIONAL” search box. Type in the name of the firm.
- In the search results, click on the relevant firm and then click on “Get Details.”
- Click on “Relationship Summary” or “Part 3 Relationship Summary.”
- Do not use the website or contact information that the person provides you; use contact information that you independently verify as explained above.
- Do not rely on contact information in messaging forums or on social media (for example, in Instagram or LinkedIn profiles), as an impersonator may have posted it.
- Be suspicious if the person wants to communicate with you through an encrypted messaging app (such as Telegram or WhatsApp) or an email address that appears unrelated to the person’s firm.
- Be skeptical if the person refuses to provide you with a phone number, to talk with you on the phone, or to meet with you over video chat or in person. Note that fraudsters may go so far as to impersonate an investment professional on the phone, over video chat, or in person. But refusing to talk, or to meet, with you is a red flag.
- Never rely solely on customer reviews or testimonials in making an investment decision. Fraudsters sometimes publish fictitious customer reviews or pay people to appear in fake testimonial videos.
In general, if you have any doubt about the authenticity of a person or organization soliciting investment funds from you or a family member, contact the securities regulator in your state.
To protect against all types of instant messaging scams, it is wise to follow these guidelines consistently: Do not share personal information in response to unsolicited messages; avoid clicking on suspicious links or attachments; be cautious with messages from unknown senders; enable two-factor authentication on your messaging platforms; and adjust your privacy settings to limit who can contact you.
