Beware Fraudsters Impersonating Regulators, Finra Warns
Robert Cook is no Nigerian prince, but a pair of mailings under the regulator’s name that attempted to pry money from investors has him hopping mad.
The Financial Industry Regulatory Authority issued an investor alert on Friday, warning investors of “financial scams in which con artists are posing as regulators to make fraudulent investment pitches.”
Cook, chief executive of the securities industry-funded regulatory group, was impersonated in at least two fund-raising schemes—one by e-mail and won by standard mail, Finra said.
In one instance brought to Finra’s attention by someone who received an “official-looking letter,” a fraudster offered guarantee of investments under Cook’s name. The alert didn’t elaborate, but said that a “common advance-fee scam involves enticing investors into sending money to cover administrative or regulatory charges associated with a buyback of shares of stock that are currently virtually worthless or underperforming.”
A separate e-mail scam using Cook’s name portrayed Finra as a “recognized financial manager of the IMF” and told recipients that the organization had approved release and payment of an outstanding inheritance fund. (The mailing, which asked for passport data and other personal information, required the victim to fly to another country outside the reaches of U.S. regulators and law enforcement authorities to claim the money.)
The alert included a copy of the guarantee letter, which featured Finra logos and legal-sounding language but that was riddled with inaccuracies that included misidentifying Cook as chairman, referring to the SRO as “FinRa” and alluding to an offshore transfer agent approved by the fictional Financial Securities Rule-making Board.
Fraudsters commonly obtain target names from shareholder lists of defunct companies, Finra said.
“Financial fraudsters go to great lengths to appear legitimate, making it difficult for investors to recognize their ruses,” Gerri Walsh, Finra’s senior vice president for investor education, said in the alert. “That’s why we are telling investors flat out that Finra does not guarantee investments, and our officers play no role in facilitating investment opportunities.”
The alert advised investors to do their homework in investigating names and addresses, to hang up on suspicious calls, to delete e-mails, and to call government agencies to confirm authenticity.
Finra spokeswoman Angelita Williams said that no money was lost in the Cook spoofing schemes, but added: “We believe that these calls are often the tip of the iceberg and that there are other folks out there who may be receiving these solicitations and are unaware that they are fraudulent.”
Separately, the President’s Council of Economic Advisors on Friday issued a report on cybersecurity breaches that identified the U.S. financial services sector as most vulnerable to attacks among major industries. Financial firms reported 471 breaches in 2016, according to the report, which put a price tag of between $57 billion and $109 billion in costs to U.S. industries.