Beware of Fake 'Guaranteed' FINRA Investment Pitch

finra scams

Beware the word “guarantee.”

The Financial Industry Regulatory Authority (FINRA) is warning investors of a new scam involving fraudsters who pose as regulators pitching a guaranteed investment that’s actually an advance-fee scheme.

“A common advance-fee scam seeks to entice investors to send money to cover administrative or regulatory charges associated with a buyback of shares of stock that are currently virtually worthless or ‘underperforming’,” FINRA states in an investor alert. “Once you send money, you never see it — or any of the money promised from the stock buyback — again.”

The notices to investors indicate that FINRA guarantees the investment.

The fraudsters have impersonated FINRA chief executive officer Robert Cook, and use FINRA’s name and logo. The link above includes an actual letter that an investor sent to FINRA about the scam. Note the numerous misspellings and wrong references, and the words “guarantee” and “guarantee absolute.”

FINRA, it should be noted, makes clear that it never guarantees anything.

Here’s the way it works. The crooks use lists of shareholders of defunct companies or other lists that include personal contact information and financial holdings. Through repeated phone calls, the crooks build a relationship with the investor, and they may also send documents that appear to be legit. The crook stays in touch with the investor until money is sent – and then either asks for more money or disappears.

There’s another type of fraud in play, too.

Crooks impersonate FINRA’s president and CEO and make it appear that FINRA is a financial manager of the International Monetary Fund (IMF). The emails state that approval has been attained for the release and payment of the recipient’s inheritance fund.

The crook then says that, to claim the inheritance, the recipient has to fly out of the U.S. — which means he or she will be out of the jurisdiction of U.S. law enforcement. Recipients also are asked for personal information, including a copy of their passports. That, says FINRA, is a classic phishing scam.

FINRA also notes that the IMF has issued warnings about these scams.

Anyone wondering if they’ve been approached by a fraudster can use FINRA’s “scam meter” to get a better idea.

About Terry Sheridan

Terry Sheridan

Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.


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