Francisco Faraco's Perspective on Avoiding Broker Imposter Schemes via FINRA BrokerCheck

 

Although impersonation scams are not new, they are becoming more sophisticated with each passing day. In February 2021, the Financial Industry Regulatory Authority (FINRA) reported an increase in cyber-related incidents involving fake websites that use the personal information of real industry professionals.

In response to the increasing number of impersonation scams, the FBI and the Securities and Exchange Commission warned investors about this issue. FINRA Brokercheck Francisco Faraco, CFA Charterholder and Teaching Assistant in Financial Mathematics at the University of Chicago for the Master of Science, believes these schemes can be hard to spot unless you have the necessary knowledge. Here are a few tips to help identify the fakes.

Website

By creating fake websites, these fraudsters imitate the operations of real investment professionals, collecting the personal information of potential customers over the phone.

Aside from the usual mistakes, such as poor grammar, investors should also be on the lookout for websites that use the registered representatives' names as their domain names. For instance, firstnamemiddlenamelastname.com might be a fake website that imitates the domain name of a real investment representative.

Documents

Another type of impersonation scheme is the impersonation of an investment professional. In this case, the scammer uses a fake report from the Financial Industry Regulatory Authority (FINRA) to lure potential customers.

The report, doctored to look like it came from a real investment firm, is sent to potential clients through an email. It contains various details, such as a request for investors to provide their driver's license photos and other sensitive information.

How To Stay Safe From Broker Imposter Schemes

Going To The Source

The Better Business Bureau suggests that investors use FINRA BrokerCheck to confirm that the information they receive is legitimate. The SEC's Investment Disclosure is also a valuable resource that produces reports that contain information about investment advisers.

Look For Things That Appear Out Of Place

Always make sure that you compare the documents you receive from them with the ones you get from the sources mentioned above. In many cases, the doctored information included in the document was in different fonts and included items that were not included in the other sections.

Do Not Send Money Or Personal Information

Before sending money or personal information, ensure that the recipient is genuinely interested in the transaction. Besides your driver's license, other important details, such as your social security number, should never be sent without proper verification.

Before you send financial or personal information to an individual or firm, make sure that you contact the appropriate regulator. For instance, if you are an investment professional, you should ask your company's compliance department to investigate if a potential scam artist is using your name and information in a way that could be misleading.

FINRA Brokercheck is an important tool to help investors stay safe from imposter schemes. Start browsing your way through the FINRA BrokerCheck to find out how it can help you.


Disclaimer: This article's content is solely for informational purposes and is not written to be taken as tax, legal, financial, or investment advice. The author of this article does not evoke a recommendation, solicitation, offer, or endorsement through its content, for the sale or purchase of financial securities in the United States of America or any other jurisdiction. The article's content presents general information without addressing any individual's circumstances. The article is not written to incorporate all relevant matters discussed or the related law. You assume the responsibility of appraising the facts and merits when using the information presented in the article. The author is not liable for any damages claimed from any action you perform based on the information presented in the article.



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