FINRA Issues Investor Alert, Messaging Apps Are Latest Platform for Delivering Pump-And-Dump Scams
WASHINGTON—The Financial Industry Regulatory Authority (FINRA) issued a new Investor Alert called Messaging Apps Are Latest Platform for Delivering Pump-And-Dump Scams. FINRA's new Alert warns investors to be wary of stock promotions sent through increasingly popular messaging apps such as WhatsApp.
In recent weeks, WhatsApp users were flooded with text messages touting the stock of Avra, Inc. (OTC: AVRN). The messages touting this microcap stock appeared to be sent from individuals at well-known brokerage firms and claimed AVRN was "going to double in the next few days."
"Scammers keep up with the times. If you are using a messaging app and receive a tout claiming that a stock is poised for explosive growth, don't respond—just delete," said Gerri Walsh, FINRA's Senior Vice President for Investor Education.
This latest scam is a variation of the pump-and-dump scam, where fraudsters use spam—in this case transmitted through the mass message push feature of messaging apps—to tout a stock. The buying that follows will "pump" up the price—until the fraudsters "dump" their shares by selling them at a peak. In the end, investors lose their money or are left with worthless, or near worthless, stock.
FINRA, the Financial Industry Regulatory Authority, is the independent regulator for all securities firms doing business in the United States. 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 all industry participants to examining securities firms, writing rules, enforcing those rules and the federal securities laws, and informing and educating the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers the largest dispute resolution forum for investors and firms. For more information, please visit www.finra.org.