Skip to Main Content

COVID-19 INFORMATION

TDCI Securities Division Shares SEC Investor Alert About Scammers Posing as Brokers or Investment Advisers

Federal, State Agencies Warn Investors About Scammers Pretending To Be Registered Brokers or Investment Advisers
Thursday, August 19, 2021 | 08:37am

NASHVILLE —The Tennessee Department of Commerce & Insurance’s Securities Division is joining the FBI Criminal Investigative Division and the U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy to warn investors about the rise of scammers and con artists making false claims about being registered investment brokers.

Fraudsters may be falsely claiming to be registered with the SEC, the Financial Industry Regulatory Authority (FINRA) or a state securities regulator in order to lure investors into scams or they may impersonate actual investment professionals who are registered with these organizations. These nefarious individuals may misappropriate the name, address, registration number, logo, photo or website likeness of a currently or previously registered firm or investment professional in order to swindle investors.

“As scammers grow increasingly sophisticated with their schemes and swindles, investors have to be on guard like never before in order to protect themselves,” said TDCI Assistant Commissioner Elizabeth Bowling. “If someone contacts you about an investment that sounds too good to be true, it probably is. Always be skeptical, don’t be afraid to ask questions or walk away if something sounds fishy.”

Tennessee consumers can contact the TDCI Securities team with questions by phone at 615-741-2947 or 800-863-9117 (Toll Free) or by email at securities.1@tn.gov.

Consumers can learn to protect themselves by learning the tricks and tactics that scammers use, including the following:

  • “Spoofed Websites.” Fraudsters may set up websites using URL addresses or names similar to those of registered firms or investment professionals to trick investors into believing that the fraudsters are registered or that the fraudsters are affiliated with a registered firm or investment professional.
  • Fake Profiles on Social Media. Fraudsters may set up profiles impersonating registered investment professionals on popular social media platforms and then message investors to solicit their money.
  • Cold Calling. Fraudsters may set up boiler rooms with teams of people cold calling investors to solicit their money while claiming to be employees of registered firms. The fraudsters may use technology to make it appear they are calling from the firm’s location.
  • Misrepresenting or Falsifying Documents. Fraudsters may recruit investors by misrepresenting that their firm was registered with the SEC, including pointing to the firm’s Form D filings to support the misrepresentation (to learn more, read this OIEA Investor Alert). Fraudsters may solicit investors by impersonating a registered investment professional and generating a fake version of a public report using the professional’s name and CRD number (to learn more, read this FINRA Investor Alert).

Registration of Investment Professionals. Many sellers of investment products or services are either brokers, investment advisers or both. Most brokers must register with the SEC and join FINRA. Investment advisers that provide investment advice to retail investors generally must register with the SEC or the state securities regulator where they have their principal place of business.

Verify the identity of anyone offering you an investment. Don’t rely on the website or contact information the person provides you. If you suspect someone is falsely claiming to be registered with the SEC, do not give the person any money and do not share your personal information. Report the person to the SEC.

To quickly and easily check if someone offering you an investment is currently licensed or registered, use the search tool on Investor.gov. Once you confirm that the seller is licensed or registered, make sure you are not dealing with an imposter.

Contact the seller using contact information you verify independently — for example, by using a phone number or website listed in the firm’s Client Relationship Summary (Form CRS) – rather than relying on contact information the seller provides you.

To ensure you are looking at a genuine copy of the firm’s Form CRS, follow these steps:

  1. In the “Check Out Your INVESTMENT PROFESSIONAL” search box on Investor.gov, select “Firm” from the drop-down options and type in the name of the firm.
  2. In the search results, click on the relevant firm and then click on “Get Details.”
  3. Click on “Relationship Summary” or “Part 3 Relationship Summary.”

For additional information about Form CRS, visit investor.gov/CRS.

Watch Out for Red Flags. Regardless of whether someone claims to be registered with the SEC, beware if you spot these warning signs of an investment scam:

  • Guaranteed High Investment Returns. Promises of high investment returns – often accompanied by a guarantee of little or no risk – is a classic sign of fraud. Every investment has risk and the potential for high returns usually comes with high risk.
  • Unsolicited Offers. Unsolicited offers (that is, you didn’t ask for it and don’t know the sender) to earn investment returns that seem “too good to be true” may be part of a scam.
  • Red flags in payment methods for investments.
    • Credit Cards. Most licensed and registered investment firms do not allow their customers to use credit cards to invest.
    • Digital Asset Wallets and “Cryptocurrencies.” Licensed and registered financial firms typically do not require their customers to use digital asset wallets or digital assets, including so-called “cryptocurrencies,” to invest.
    • Wire Transfers and Checks. If you pay for an investment by wire transfer or check, be suspicious if you’re being asked to send or to make the payment to a person or to a different firm, the address is suspicious (for example, an online search for the address suggests it is not an office building where the firm operates) or you are told to note that the payment is for a purpose unrelated to the investment.

The SEC maintains a list of Impersonators of Genuine Firms. This list is not exhaustive – firms may be impersonated even if they are not on the list. (FINRA staff issued an article about imposter schemes.) More information about online frauds and investment scams can be found at www.fbi.gov or Investor.gov, the SEC’s website for individual investors.

Consumers can contact the SEC’s Office of Investor Education and Advocacy (OIEA) by phone at 1-800-732-0330, using this online form or via email at Help@SEC.gov. Report possible securities fraud to the SEC at www.sec.gov/tcr. Report online fraud to the FBI’s Internet Crime Complaint Center at https://www.ic3.gov.

Tennessee consumers can contact TDCI’s Securities team if by phone at 615-741-2947 or 800-863-9117 (Toll Free) or by email at securities.1@tn.gov.

###