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FINRA

 

 

FOR RELEASE:
CONTACTS:
Tuesday, September 6, 2005
Nancy Condon (202) 728-8379
Sarah Bohn (202) 728-8988

 

 

NASD Issues Alert on Financial Scams Targeting Non-U.S. Investors

Washington, DC — NASD today warned non-U.S. investors about sophisticated investment scams that use phony "regulator" Web sites and fake broker identities to prey on investors unfamiliar with U.S. securities products, markets and regulations. These scams target individuals in countries such as Australia, New Zealand, South Africa and elsewhere, who have lost money in a previous investment deal and are eager to reverse their losses.

 

NASD's Investor Alert, Well-Traveled Fraud, describes advance-fee schemes drawn from actual investor complaints investigated by NASD. These scam artists contact their victims with the help of call lists that may include detailed personal financial account information.  The typical scam begins with a phone call from an individual to one of these targeted investors offering to pay an enticingly high price to buy shares of a virtually worthless or "non-performing" stock the investor owns.  To build legitimacy, the caller refers investors to authentic-looking, phony Web sites that contain investor protection information. The caller may also pose as a legitimate securities professional or regulator. To receive the deal, investors are asked to send a fee in advance to pay for administrative or transaction services. But the deal never takes place, and the investor never sees his or her money again.

 

"It is very difficult for regulators and law enforcement agencies to recover any losses from these 'advance fee' scams, and an investor's best defense is to avoid being defrauded in the first place," said NASD Vice Chairman Mary L. Schapiro. "NASD's Alert offers investors important tips on how to do that, along with a list of resources - both in the U.S. and abroad - that non-U.S. investors can turn to for legitimate help and advice."

 

The best way for investors to verify that they are dealing with a legitimate U.S. securities professional working for a registered U.S. securities firm is to look up the individual and the firm on NASD's free online service, BrokerCheck.  BrokerCheck contains the professional background, registration/license status, employment history and disciplinary history of all registered securities professionals and similar information on all registered securities firms. If the individual and/or firm are not listed in BrokerCheck, chances are they are frauds.

 

Some scam artists fraudulently use the identities of real brokers. So as an extra precaution, investors should use the contact information in NASD BrokerCheck - not information provided by the caller - to contact the broker or firm directly. Investors should ask to speak to the compliance officer of the firm to verify the firm's identity and the broker's identity. NASD knows of more than 50 legitimate U.S. securities firms and individual brokers whose identities have been hijacked to create an appearance of legitimacy to help carry out fraudulent activities.

 

For non-U.S. investors who suspect that they are being scammed or who have lost money in an advance-fee scam, the best place to start is with their home country's securities regulator.  Investors should not hesitate to call or e-mail their regulator at the first sign of impropriety.  If they suspect fraud on the part of a U.S. firm or individual, or simply want to talk through an investment that seems a little too good to be true, they can call NASD at (240) 386-4357 or file an online complaint or question at http://complaint.nasd.com.

 

NASD is the leading private-sector provider of financial regulatory services, dedicated to bringing integrity to the markets and confidence to investors through effective and efficient regulation and complementary compliance and technology-based services. NASD offers a broad range of tools and programs to help people better understand investing and know how to protect themselves along the way - including developing and publishing Investor Alerts, brochures and online resource guides on such critical topics as mutual fund class shares and 401(k) and college savings plans. NASD has distributed this information through its Web site, printed materials and Investor Forums.

 

NASD touches virtually every aspect of the securities business — from registering and educating all industry participants, to examining securities firms, enforcing both NASD rules and the federal securities laws, and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at www.nasd.com.