CFTC BEGINS CAMPAIGN TO HELP INVESTORS IDENTIFY FINANCIAL FRAUD

FROM:  COMMODITY FUTURES 

CFTC Launches National Campaign to Protect Consumers from Financial Fraud

New CFTC SmartCheck Website Offers Investors Access to Quick, Effective Tools to Check Backgrounds of Financial Professionals

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today launched CFTC SmartCheck, a new national campaign to help investors identify and protect themselves against financial fraud. The comprehensive campaign includes a new website, a national advertising campaign and interactive videos that will help investors spot investment offers that are potentially fraudulent. The new website, SmartCheck.CFTC.gov, unveiled today, is an educational tool that helps investors conduct background checks of financial professionals.

“The CFTC is committed to protecting investors from fraud, and we demonstrate that commitment today with the launch of CFTC SmartCheck,” said CFTC Chairman Tim Massad. “This campaign provides investors with new interactive tools that include the website as well as a targeted advertising campaign and collaborative outreach with allied organizations.”

Over the coming months, the CFTC SmartCheck campaign will include online, television, and print advertising slated to run nationwide and additional outreach efforts with organizations aligned with the CFTC’s mission to reduce financial and investment fraud. The campaign will also feature special events to reach investors and encourage them to use the online tools available at SmartCheck.CFTC.gov. In addition to the background-check tools, the SmartCheck.CFTC.gov website includes a range of information for investors, including interactive videos that help illustrate how to avoid fraud.

Prior to SmartCheck.CFTC.gov, consumers had to consult a variety of databases from different government and self-regulatory organizations to conduct a thorough background check of financial professionals. With SmartCheck.CFTC.gov, this research is made far easier because the website acts as a portal and navigation tool.

The CFTC took action on fraudulent schemes that affected at least 30,000 investors between 2010 and 2013, with losses totaling more than $1 billion. Notably, the majority of fraud schemes involved unregistered financial professionals. Investors who check whether or not a financial professional is properly registered or licensed can greatly reduce their chance of falling victim to a fraudulent scheme. The new CFTC SmartCheck website will help consumers identify those most likely to commit fraud.

Last Updated: November 19, 2014

SEC WARNS INVESTORS ABOUT FRAUDSTERS USING SOCIAL MEDIA TO MANIPULATE STOCK PRICES

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy (“OIEA”) is issuing this Investor Alert to warn investors about fraudsters who may attempt to manipulate share prices by using social media to spread false or misleading information about stocks.

Social media and the Internet in general have become important tools for investors. Investors may use social media to research particular stocks, look up background information on a broker-dealer or investment adviser, find guidance on investing strategies, receive up-to-date news, and discuss the markets with others.

While social media can provide many benefits for investors, it also presents opportunities for fraudsters. Through social media, fraudsters can spread false or misleading information about a stock to large numbers of people with minimum effort and at a relatively low cost. They can also conceal their true identities by acting anonymously or even impersonating credible sources of market information.

One way fraudsters may exploit social media is to engage in a market manipulation, such as spreading false and misleading information about a company to affect the stock’s share price. Wrongdoers may perpetuate stock rumors on social media, as well as on online bulletin boards and in Internet chat rooms.

The false or misleading rumors may be positive or negative. For example, in a “pump-and-dump” scheme, promoters “pump” up the stock price by spreading positive rumors that incite a buying frenzy and they quickly “dump” their own shares before the hype ends. Typically, after the promoters profit from their sales, the stock price drops and the remaining investors lose money. In other instances, fraudsters start negative rumors urging investors to sell their shares so that the stock price plummets and the fraudsters take advantage of buying shares at the artificially low price.