‘Significant uptick’ in Covid-19-related fraudster activity

Citing a surge in complaints and tips about investment scams, the U.S. Securities and Exchange Commission (SEC) is warning investors to be on “high alert.”

The SEC issued an investor alert, saying that it has “recently experienced a significant uptick” in reported investment scams.

“Fraudsters use times of uncertainty and change, such as the current Covid-19 pandemic, to lure victims,” the regulator said.

The SEC’s Office of Investor Education and Advocacy warned investors to be on guard against Ponzi schemes, pandemic-driven “pump and dump” scams, and affinity frauds in particular.

The SEC also noted that it has brought several enforcement actions involving companies making claims about their ability to profit from the pandemic, and that it’s aware of stock promotions using social media, email spam, and cold calls to try and drive investor buying.

“Be cautious of claims that a company’s products or services can help stop Covid-19, especially claims that involve microcap stocks,” the SEC said.

It also warned about an increase in fake deposit scams.

“During periods of market volatility, investors may be more likely to seek financial products with fixed-rate returns,” the regulator said.

“Online advertisements sometimes direct investors to “spoofed” websites that mimic the actual sites of legitimate financial institutions. These spoofed websites may be selling fake [deposits],” it added.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.