finra

FINRA

For Release:
Contacts:
Thursday, May 15, 2008
Nancy Condon (202) 728-8379
Herb Perone (202) 728-8464

 


FINRA Warns International Investors of Advance-Fee Fraudsters Misusing FINRA's Name and Impersonating FINRA Employees

Washington, DC — The Financial Industry Regulatory Authority (FINRA) today issued an updated Investor Alert warning international investors about a new twist in advance-fee fraud involving low-priced US securities. Con artists have been misusing FINRA's name and impersonating FINRA employees in email communications in an apparent attempt to lend a false air of legitimacy to their schemes.

The new ploy is outlined in a revised version of the FINRA Investor Alert Well-Traveled Fraud: Advance-Fee Scams Target Non-U.S. Investors Using Fake Regulator Web Sites and False Broker Identities.

FINRA has received several complaints from investors in the United Kingdom that all follow a similar pattern. A victim who had purchased a low-priced security in the past receives an unsolicited call from supposed brokers offering to buy back shares of the almost worthless stock - but only if the investor will pay an administrative fee in advance. The stock sale, of course, never takes place. The fraudsters claim to be with a legitimate U.S. securities firm - but the fraudsters have in fact stolen the identity of that firm. To build trust, the fraudsters send an email purportedly from FINRA that appears to verify that the firm is "properly licensed by FINRA to perform transfer or stock recovery functions" in the investor's country. A copy of the firm's FINRA BrokerCheck report is attached to the email. But the report has been altered to remove the legitimate firm's phone number and the email is signed by a representative of "FINRA Shareholder Support."

There is no "FINRA Shareholder Support." And FINRA does not send copies of BrokerCheck reports as a follow up to a sales call by a securities firm. BrokerCheck will produce background reports on a firm or a licensed broker upon request - but they are never issued unilaterally by FINRA. BrokerCheck reports can be requested by anyone - and received almost instantly - online at www.finra.org/brokercheck. Investors can also access this service by calling (800) 289-9999.

"We are extremely concerned that investors may be taken in by this attempt to highjack FINRA's identity to lend credence to a scam," said John Gannon, FINRA's Senior Vice President for Investor Education. "FINRA's regulatory responsibilities do not include assisting investors in 'contacting properly licensed brokers and transfer agents,' as the fraudulent emails state."

The Alert reminds investors that slight variations of FINRA BrokerCheck information, such as the omission of a phone number, may indicate fraudulent impersonation. Investors may contact FINRA to verify the actual phone number of a registered firm by calling (800) 289-9999. When using BrokerCheck online, investors will find a brokerage firm's phone number in the "Firm Profile" section of the "Full PDF Report" electronically generated at the investor's request.

FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. Created in 2007 through the consolidation of NASD and NYSE Member Regulation, FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business - from registering and educating industry participants to examining securities firms; writing rules; enforcing those rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms.

For more information, please visit our Web site at www.finra.org.