Be Wary of Pressure to Transfer Funds From Your Brokerage Account

Have you been asked to move money out of an investment account by someone you don’t know? Is someone telling you what to say to your financial institutions? Be wary: These are signs of investment fraud.

Recently, FINRA has seen an increase in fraud schemes in which scammers target investors—particularly older investors—and manipulate them into transferring funds from their brokerage and other financial accounts, ultimately stealing their money. These schemes typically involve social engineering tactics, such as impersonating authority figures or raising fake emergency scenarios, that encourage investors to move funds to external accounts or use them to purchase assets that are eventually sent to the scammers.

FINRA’s fraud investigations have uncovered schemes in which investors lost thousands—and sometimes even millions—of dollars in a matter of weeks. Here's information you need to help recognize these scams and protect yourself.

How These Investment Scams Work

Though the specifics of these scams vary, they have some core elements in common. Scammers often seek out older investors, typically by phone or email, impersonating trusted authorities. They might claim to be employees of your financial institution or officials from a police department or a government agency like the FBI, the Social Security Administration or the Federal Trade Commission. 

Once they’ve established contact, they’ll present an “urgent” situation that they claim requires your immediate action to safeguard your assets or resolve a problem. Frequently, they’ll claim your financial institution is involved in illegal operations or that someone else is trying to steal your money. For example, they might say that your account has been hacked, that your identity has been stolen or that your financial institution has been involved in criminal activity. They might even say that money in your account has been traced to another crime and that they need your help with the investigation. Their goal is to scare you, gain your trust and take your assets.

To do this, the scammer might provide you with detailed instructions for moving your assets. This often involves multiple steps, such as first transferring funds from your brokerage account to one or more bank accounts, either your own or a third party’s. Scammers also might tell you to purchase crypto assets, gold or other precious metals or to wire funds to another external, third-party account. They claim these steps are necessary to protect your funds or to avoid some sort of penalty, even arrest. In fact, scammers use these steps to avoid detection and get around rules that protect investors. They’ll often tell you to keep the underlying situation a secret. They might also tell you what to say, or even to lie, if your financial institution asks questions. 

In some cases, the scammers might tell you to download software, which will allow them to track your accounts or gain remote access to your devices. These scammers have been known to stay in contact for days or weeks, continuing the scam with repeated phone calls, real-time monitoring of your online activity and continuous instructions on what to do and say.

The Warning Signs

Here are some warning signs of this type of fraud.

• You’re alerted to an urgent “problem.” This is a common opening for fraud. Scammers create a false emergency to make you feel like you must take financial action immediately, before you have time to think or verify.
• You’re told to move your money "for safekeeping." Fraudsters often instruct targets to liquidate brokerage or retirement accounts and convert the funds to assets that are difficult to trace or recover. No legitimate government agency or financial institution will ask you to do this.
• You’re provided with a detailed script. If someone instructs you to take specific financial actions and tells you exactly what to say to your financial institution to execute those transactions or coaches you on how to answer potential questions from family or financial professionals, that’s a powerful indicator of fraud—especially if they encourage you to lie about the situation.
• You’re pressured to keep it secret. Scammers frequently instruct targets not to tell their family or contact their financial firm about the supposed crisis, making claims like it will “compromise the investigation” or “put your loved ones at risk.” This is an isolation tactic designed to prevent you from getting the outside perspective that could help you identify the scam.
• You’re asked to download software or grant computer access. Remote access software can allow scammers to monitor your screen or even execute transactions without your direct involvement. Never download software at the request of an unsolicited caller.
• You’re directed to open a new financial account. When existing financial institutions flag suspicious activity and intervene, scammers will direct targets to a different institution to continue the fraud. This “bank shopping” is a serious red flag.
• You’re offered an official-sounding safe haven. Scammers sometimes make up legitimate-sounding but fake accounts—like “U.S. Treasury accounts”—or other investment vehicles to make you feel comfortable moving your money.

How to Protect Yourself

If you’re contacted by someone pressuring you to move your money, immediately stop all communication. Talk to a trusted family member or friend before taking any action. You can also call FINRA’s Securities Helpline for Seniors at 844-57-HELPS to discuss any questions or concerns about your accounts.

If you’re suspicious about a communication or unsure whether it’s legitimate, contact your financial institution directly. Call the phone number on your account statement, go to the firm’s official website, or visit your firm’s local office in person to verify the request. Don’t use contact information provided by the caller or email sender.

If you think you’ve been a target of investment fraud, submit a regulatory tip to FINRA. You should also report it to law enforcement—such as your local police department, the FBI (Field Office or Electronic Tip Form) or, in the case of cybercrime, the Internet Crime Complaint Center (IC3)—and the Federal Trade Commission (FTC).

Remember, legitimate government agencies and financial firms will never tell you that you must convert your money to precious metals or crypto assets, demand secrecy from your family, or provide you with scripts to deceive your financial firm or loved ones.

Adding a trusted contact person to your account puts your brokerage firm in a better position to keep your account safe. If your firm is unable to reach you or has concerns about financial exploitation or fraud in your account, they can get in touch with your trusted contact person to help protect your assets. 

Learn more about how to avoid investment fraud.