On January 28, 2025 the Financial Industry Regulatory Authority (FINRA) released its Annual Regulatory Oversight Report1 which gives an overview of the organization’s finding from its regulatory operations programs. A section of the report is dedicated to Financial Crimes Prevention and holds insights for retail investors which can allow them to better understand how not to become a victim of financial crimes.
FINRA has seen an increase in investment fraud perpetrated by fraudsters who engage directly with retail investors. FINRA notes that the Federal Bureau of Investigation (FBI) revealed in their 2023 Internet Crime Report2 that investment fraud is the costliest type of crime traced by their Internet Crime Complaint Center. Investment scam losses topped $4.57 billion in 2023, which was a 38 percent increase over the losses reported in 2022.The second costliest type of crime was related to business e-mail. Tech support scams, which affect mostly elderly investors, ranked as the third costliest crime.
The FINRA Oversight Report outlined four common types of investment fraud: Investment Club Scams, Relationship Investment Scams; Impostor Websites and Tech Support and Support Center Scams.
Investment Club Scams
Investment Club Scams often start with a post on a social media platform that presents a well-known public figure or a registered financial professional who endorses the investment club. The public figure or registered financial profession is unaware of and did not authorize the endorsement. Scammers will then direct victims to an investment club using encrypted messaging applications where they will start out pitching well-known and actively traded stock. Over time, after they have built investor confidence, they will pitch low-priced/low-volume U.S. or Hong Kong listed stocks. Investors will then be instructed to open an account at a specific broker dealer and will be told to purchase the stock at a certain time and price, Unbeknown to the investor they are unwittingly manipulating the price of the security upward. At some point the investor is unable to sell as the security price tanks.
Relationship Investment Scams
These scams are perpetrated by people who hide their true identities from unsuspecting investors, usually contacting them unsolicited through online or text messages. The fraudster builds a relationship through friendship or romance with the investor over time, providing information to gain the investor’s trust. They offer to help the investor fulfill their financial goals and direct the investor to legitimate looking, but fake websites. For ways to avoid this type of scam click here.
Imposter Website Scams
These scams are ones where a fraudster actually creates a web presence using legitimate information from a broker-dealer firm, registered representative, financial regulator or law enforcement agency. The Federal Trade Commission offers information on these scams and how to avoid them, click here.
Tech Support and Support Center Scams
These scams usually start with an unsolicited phone call or text message from a fraudster claiming to be from tech support. They can also pop-up when you are using your smartphone or a computer and they can be advertised in websites and online ads as a legitimate tech support number. Scammers impersonate tech support personnel to steal sensitive investor information and to ask for money as payment to fix a tech support issue. The Federal Trade Commission offers tips, click here, on ways to spot and avoid these scams.
As another aid in protecting investors the Securities and Exchange Commission recently announced the formation of its Cyber and Emerging Technologies Unit which will be focused on “combatting cyber-related misconduct and protecting retail investors from bad actors in the emerging technologies space.” 6
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An experienced and trusted securities lawyer can answer your questions, and address your concerns about your investments and how they are being managed. Our Securities Law Firm in Royal Oak, Michigan is well versed in all areas of investment fraud and securities litigation including stockbroker mediation, FINRA arbitration, and litigation claims.
Know and protect your rights as an investor by seeking appropriate counsel and call our Metro area securities firm today.
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1 2025 FINRA Annual Regulatory Oversight Report, 1/28/2025
Link: https://www.finra.org/rules-guidance/guidance/reports/2025-finra-annual-regulatory-oversight-report
2 FBI 2023 Internet Crime Report
Link: https://www.ic3.gov/AnnualReport/Reports/2023_IC3Report.pdf
3 Relationship Investment Scams: Protect Yourself
Link: https://www.investor.gov/protect-your-investments/fraud/types-fraud/relationship-investment-scams
4 How to Avoid Impostor Scams
Link: https://consumer.ftc.gov/features/how-avoid-imposter-scams
5 How to Spot, Avoid, and Report Tech Support Scams
Link: https://consumer.ftc.gov/articles/how-spot-avoid-and-report-tech-support-scams#Spotting
6 SEC Announces Cyber and Emerging Technologies Unit to Protect Retail Investors , 2/20/2025
Link: https://www.sec.gov/newsroom/press-releases/2025-42