Securities regulators in the U.S. are warning investors about scammers targeting investors taking hardship withdrawals from their retirement accounts due to the pandemic.
The U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy, the North American Securities Administrators Association (NASAA) and the Financial Industry Regulatory Authority (FINRA) issued a joint warning to investors about fraudsters seeking to take advantage of certain Covid-19 relief measures.
In particular, investors affected by the pandemic can access to up to US$100,000 of their retirement savings without facing early withdrawal penalties.
The regulators warn that unscrupulous promoters are pushing investors to take advantage of this provision to buy new, risky investments, rather than take care of immediate financial needs.
“Fraudsters and other bad actors are using these [provisions], which are intended for those facing economic hardship from Covid-19, to promote high-risk, high-fee investments and other inappropriate products and strategies,” the regulators said.
The agencies warn investors to be alert to such schemes and to do their research before making any investment decision.