FINRA Investor Alert: Surge in Social Media ‘Investment Group’ Scams

The Financial Industry Regulatory Authority (FINRA) is alerting investors to a significant rise in fraudulent schemes conducted through social media and encrypted messaging apps. These scams are increasingly sophisticated, targeting individuals with promises of high returns via so-called “investment groups” or clubs. Scammers exploit online trust, often impersonating registered investment professionals, well-known public figures, or even entire investment firms. Some use deepfake videos or stolen personal information to create a false appearance of legitimacy.

The scams typically begin on popular social media channels such as Instagram, Facebook, and LinkedIn, where promoters advertise exclusive investment opportunities. Investors are then invited to join encrypted chat groups on platforms like WhatsApp, Telegram, or Signal. Within these groups, the perpetrators guide victims to invest in stocks, low-volume equities, or crypto assets, providing detailed instructions on timing, amounts, and accounts to use.

Some investors are encouraged to transfer funds from multiple accounts or borrow money, which can dramatically increase potential losses. While initial returns may sometimes appear positive, the ultimate outcome is often significant financial harm, as scammers manipulate prices before exiting the market and leaving investors unable to sell.

Reports indicate that the impact of these scams is expanding beyond domestic investors, with an increasing number of victims located outside the United States. The sophistication of the schemes, combined with rapid adoption of encrypted communications, has made detection and prevention challenging. Regulators continue to monitor these developments and issue warnings about the evolving methods used to defraud investors.

BrokersView Reminds You

Exercise extreme caution when receiving investment advice or invitations through social media and encrypted messaging, and to verify the legitimacy of any individual or firm before committing funds.If you have questions about a broker, you can ask BrokersView.