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Avoid investment fraudsters

If you are an investor, I highly recommend that you listen to a recording of a telephone conversation between a fraudster and a victim — an actual fraud caught in action.

In the recording, which was made by the victim, the fraudster is posing as a compliance officer from the U.S. Securities and Exchange Commission. The most disturbing aspect of the call is that the fraudster is pretending to be helping the victim, in this case, to confirm a trade.

Here is a partial transcript:

“I’m a senior compliance officer with the Securities and Exchange Commission … my job is to simply verify and confirm the order … so I am confirming a buy order from Mr. (name of person), who is a portfolio manager of (name of firm) … in accordance to the regulations that are set forth by the Securities and Exchange Commission on the U.S. markets, Mr. (name of investor), for the protection of both parties, what I’m going to do is record the details of the trade. It goes on file as a voice audio signature with the Securities and Exchange Commission as a regulated trade. OK? … and it functions exactly as a fingerprint. It’s non-retractable … do I have your consent to place the order, Mr. (name of investor)?”

Even though the subject matter of the recording may not be relevant to you, I suggest you listen to it.

Although it sounds like an everyday conversation, it is not — it illustrates what fraud sounds like.

As Lori Schock, director of the SEC’s Office of Investor Education and Advocacy, explained in a press release on April 4, the SEC wanted to release the recording for a reason: The SEC wanted “investors (to) … hear the lies and high-pressure tactics imposters use to cheat potential victims out of their money.”

Fraudsters claim to be SEC employees in an attempt to trick investors into sending money or revealing sensitive account information.

Just in case you are wondering if the SEC would call an investor, the answer is “no.”

According to an SEC Investor Alert posted April 4, 2018: “The SEC does not contact investors to confirm trades, set up trading accounts, or record the details of trades. Federal government agencies, including the SEC, do not endorse or sponsor any particular securities, issuers, products, services, professional credentials, firms or individuals. Any correspondence you receive purportedly from the SEC confirming a specific securities transaction is a red flag of fraud.”

Impersonations also can occur by email.

For example, investors may receive an email containing a fake Form 4 from the email address, which may look like a legitimate SEC website for anyone familiar with EDGAR. (EDGAR is an SEC database of corporate filings.)

In an investor alert from November 2016, the SEC noted: “A private entity registered the domain name without SEC authorization and the SEC has obtained an order suspending this Internet domain name.” The SEC went on to warn investors to be alert to “similar official-looking domain names.”

The SEC warned that if the sender of an email claiming to be from a U.S. government agency does not “end in .gov, .mil or, you should be particularly skeptical.” But that’s not enough: The SEC warned that “Even if the sender’s email address appears to end in .gov, .mil or, an impersonator may have sent the email message.”

To read “Investor Alert: Investment Scams Involving Fake Forms 4” (November 2016), go to

What should you do if you receive a call or correspondence from the SEC?

More often than not, you won’t be sure of authenticity. For that reason, it’s best to call the SEC’s toll-free investor assistance line at 800-732-0330 (or 202-551-6551 from outside the U.S.).

If you have been contacted by someone pretending to be from the SEC, submit a complaint form (found at to the SEC’s Office of Inspector General, or call the OIG’s toll-free hotline at 877-442-0854.

To listen to the full fraudster transcript, go to

For additional resources, read “Investor Alert: Beware of Government Impersonators Targeting Fraud Victims” (June 2016) at

Julie Jason is a personal money manager at Jackson, Grant of Stamford, Conn., and an award-winning author. Contact her at

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